The Role of Central Banks in Retail Payments - PowerPoint PPT Presentation

1 / 20
About This Presentation
Title:

The Role of Central Banks in Retail Payments

Description:

Credit cards. Debit cards 'Wire transfers' Travellers' cheques. etc ... Balance between cooperation and competition. Access restrictions. Pricing and transparency ... – PowerPoint PPT presentation

Number of Views:16
Avg rating:3.0/5.0
Slides: 21
Provided by: RRU
Category:

less

Transcript and Presenter's Notes

Title: The Role of Central Banks in Retail Payments


1
The Role of Central Banks in Retail Payments
  • Marc Hollanders
  • Bank for International Settlements
  • Washington, 4 November 2003

2
What are retail payments?
  • Large numbers, low values
  • Many transactors (individuals and businesses)
  • Goods, services, personal
  • Wide range of contexts
  • Wide range of instruments

3
Policy objectives
  • Safety and Efficiency
  • What is the focus of these two objectives in
    the case of retail payments?

4
Policy objectives
  • Safety
  • Systemically important payment systems
    potential for systemic risk
  • Legal, financial, operational risks
  • Retail payment systems importance to economic
    activity
  • Operational risks security and operational
    reliability

5
Policy objectives
  • Efficiency
  • All payment systems
  • Significant costs are involved
  • Important economic needs must be met
  • Significant choices must be made

6
Retail payment instruments
  • Cash
  • Cheques
  • Giro payments
  • Direct debits
  • Direct credits
  • Credit cards
  • Debit cards
  • Wire transfers
  • Travellers cheques
  • etc

7
How are retail payments processed?
  • Transaction process creation, validation and
    transmission
  • Clearing exchange of instrument/information and
    calculation of settlement claims
  • Settlement discharge of settlement claims

8
Current trends services to end-users
  • Continuing use of cash and of paper instruments
  • Increasing use of direct debits
  • Increasing and more diverse use of payment cards
  • New types of service and delivery channels
  • E-money
  • Increasing demand for cross-border services

9
Current trends - processing
  • Transaction process payment card model
    proprietary arrangements, interchange fees
  • Clearing automation, safety improvements
  • Settlement more prompt/more frequent

10
Current trends - institutional
  • Financial sector consolidation
  • But increasing fragmentation in market in
    services to end-users
  • Outsourcing and specialisation
  • New market participants

11
Policy issues
  • Legal and regulatory
  • Structure and performance of the market
  • Market infrastructure and standards
  • Central bank services

12
Legal and regulatory issues
  • Legal and regulatory provisions may fail to keep
    pace with payment innovation in unintended ways.
  • There may be gaps or inconsistencies.
  • Safeguards against criminal use may not be
    adequate.
  • Cross-border payments may be a particular
    problem.
  • Legal and regulatory provisions may create entry
    barriers contrary to policy intentions.

13
Structure and performance of the market
  • Importance of competition
  • Balance between cooperation and competition
  • Access restrictions
  • Pricing and transparency

14
Market infrastructure and standards
  • Adequate security
  • Adequate operational reliability
  • Infrastructure arrangements
  • - more concentrated risk
  • - governance structures
  • Standardisation and interoperablility network
    effects and market incentives

15
Central bank services
  • Need to keep pace with market developments
  • Transparency
  • Pricing
  • Access

16
Public policy goals for all relevant public
authorities
  • Policies should be designed to
  • address legal/regulatory impediments
  • foster competitive market conditions and
    behaviours
  • support development of effective standards and
    infrastructure
  • provide central bank services effectively

17
Role of central banks
  • Variety from country to country
  • Operational settlement, clearing, other
    services
  • Oversight
  • Catalyst or facilitator based on cooperative
    relationships with public and private sector

18
Recommended minimum actions by central banks
  • Review and monitor
  • Cooperate and advise

19
Possible additional actions
  • Depending on market conditions and on central
    banks powers and responsibilities
  • More proactive catalyst/facilitator activity
  • Intervention as overseers
  • Intervention as service providers

20
Summary
  • A first attempt to find common policy themes on
    retail payments
  • Diversity of central banks current involvement
  • Common objectives
  • Policy issues arising out of current market
    trends not everywhere at the same time
  • Common public policy goals
  • Central bank actions recommended minimum
    actions and possible additional actions
Write a Comment
User Comments (0)
About PowerShow.com