Reuters: Financial Services and Real Estate: Australia cenbank could force change in payments system

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Australia cenbank could force change in payments system Mar 30th 2012, 03:59 KANSAS CITY, March 30 | Thu Mar 29, 2012 11:59pm EDT KANSAS CITY, March 30 (Reuters) - Australia's central bank is considering forcing much-needed updates in the country's payments system, breaking a deadlock between competing banks that has held back innovation. Reserve Bank of Australia (RBA) Assistant Governor Malcolm Edey said the central bank was considering setting target dates for new standards to be adopted and then delegating an industry body to deal with the technological changes needed. "All of that would amount to a governance model where the regulator makes high-level decisions as to the public interest, while industry participants determine the most efficient means of implementing them," Edey said in prepared remarks to be delivered to a payments conference at the U.S. Kansas City Federal Reserve. The RBA, as regulator of the payments system in Australia, is in the finishing stages of a strategic review of necessary innovations, which was first begun in July 2010. Edey said he did not want to foreshadow the conclusions of the review but noted that the RBA could take a "more prescriptive approach" to setting objectives for members of the payments system. The RBA has been particularly keen to drive faster real-time payments at the retail level; greater access to payments systems outside normal banking hours; a greater capacity to send information with payments and easier ways to address payments. Banks and other interested parties in Australia have been reluctant to take on the cost of such updates when there was no clear proprietary benefits and the change could well lead to greater competition. The RBA has also been considering the need for a more centralised architecture for clearing and settlement of retail payments, known as hubs. Edey said such hubs may be more efficient than the current system and more conducive to both competition and innovation. However, that would have to be balanced against the costs of the investment. "Again, this is a key question of system design for which there needs to be a coordinated answer, whether the eventual decision is for or against," said Edey. (Reporting by Wayne Cole) Link this Share this Digg this Email Reprints

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