The national payment system is the backbone of a country’s monetary and financial system and it plays a critical role in a country’s economic development. It is through the payment system that money is transferred between savers and lenders, buyers and sellers or from one point to another. Developing a national payment system is an ongoing process. By reforming and developing the national payment system, it is possible to reduce the overall transaction costs and expand opportunities for commercial and financial transactions in an economy. In recent years, there has been a rapid acceleration in fundamental reforms to national payment systems worldwide, although the pace of implementation of reforms in different countries has been uneven. Planned outcomes have not always been achieved in terms of expected use, benefits or costs of payment system reform projects and many planned reforms have been unexpectedly slow to complete. In its modernization programme which commenced in 2001, the Central Bank refocused on its core objectives, i.e. the economic and price stability and the financial system stability. The financial system stability objective encompasses a wide range of subjects of which, the establishment of a safe and sound payment system was seen crucial for the development of the financial sector, which is also complementary to the maintenance of price stability. In this context, the Central Bank examined the adequacy and the efficiency of the payment system to satisfy the needs of an evolving economy and decided to undertake comprehensive payment reforms.
To underpin the payment reforms undertaken by the Central Bank and enhance integrity and safety of such systems, a comprehensive legislation to govern payment, clearing and settlement systems in general and to provide the Central Bank with oversight and regulatory powers over various payment systems and money transfer service providers has been enacted through the Payment and Settlement Systems Act of 2005. The Act empowered the Central Bank to be the authority responsible for the national payment system, which requires oversight and continuous surveillance of all payment systems to ensure its efficiency and effectiveness. The systemically important payment systems will be reviewed periodically to ensure that the design and operation meet with international standards and best practice. Some of you may be aware that a couple of months ago, the Central Bank established a National Payments Council which is the highest decision making body with regard to payment systems. This committee represented by all stakeholders provides a forum for constant dialogue on payment issues to take place within the industry. The National Payments Council is responsible for developing the payment and settlements infrastructure in collaboration with all the relevant authorities and stakeholders. Currently, it is in the process of finalizing a road map for the development of the national payment system in the next five years, which will be in line with the vision of the financial sector.