Regional Experience on Clearing and Settlement Systems
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1 Regional Experience on Clearing and Settlement Systems Johannesburg 19 June 2003 Alice Zanza Reserve Bank of Zimbabwe
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Regional Experience on Clearing and Settlement Systems. Johannesburg 19 June 2003 Alice Zanza Reserve Bank of Zimbabwe. Relevance of clearing and settlements. Trading has to be settled Barter Cash Electronic payments Investor confidence in the payment system Financial stability - PowerPoint PPT Presentation
Transcript of Regional Experience on Clearing and Settlement Systems
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Regional Experience on Clearing and Settlement
Systems
Johannesburg 19 June 2003
Alice ZanzaReserve Bank of Zimbabwe
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Relevance of clearing and settlements
Trading has to be settled – Barter– Cash– Electronic payments
Investor confidence in the payment system
Financial stability– Systemic risk
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Systemic Risk“The risk that the failure of one participant,
in financial markets generally, will cause other participants to be unable to meet their obligations”
Effects:Significant liquidity problemsThreat not only to whole financial sector but economy as a wholeNightmares for the Central bank
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Components of Payment System
Banks Financial InstitutionsGovernmentRules and RegulationsProcesses and ProceduresLegal FrameworkInfrastructureTransactions ( Payment and Settlement)End users/ CustomersService ProvidersOther Stakeholders
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Building Safe and Efficient Payment System
Combined action by central bank and banking industry– Shared vision
Cooperation from other stakeholdersClear cut division between Competition and
CooperationTechnical efficiencyCompatibility with monetary policyAccess criteriaCompatibility with payment systems from
other countries
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Building Safe and Efficient Payment System
Driver Support from the top‘Troublemaker’Long term approach Avoid quick fix Commitment, commitment and commitmentContinuity
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Goal DefinitionGross Settlement
One to oneHigh value paymentsHigh liquidity requirementsLow riskCredit push
Net settlementLower liquidity requirementsHigher riskLegal basisHigh and low value payments
Clearing CyclesSettlement Time
– End of day– Deferred
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Goal DefinitionFinality and IrrevocabilityDelivery versus Payment (DVP)
-Securities market-How are you going to achieve this-Various modelsG30 Recommendations for SSSBIS Report: Recommendations for SSS( RSSS)CPSS + IOSCO- Nov 2001 “Assessment methodology for “RSSS”- Nov 2002
Central Securities DepositoryGovernment securities vs EquitiesImmobilisation / Dematerialisation
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Regional TrendsMEFMI (10 )
– Angola– Botswana– Lesotho– Malawi– Namibia– Swaziland– Tanzania– Uganda– Zambia– Zimbabwe
SADC (14)– Angola– Botswana– Lesotho– Malawi– Namibia– Swaziland– Tanzania– Zambia– Zimbabwe– DRC– Seychelles– South Africa– Mauritius– Mozambique
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SADC REGION
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SADC Developments9 million SQ KmEstimated population of 190 millionDiverse capabilitiesDominant use of cashWide use of chequeCredit transfers and direct debitsPayment cardsDeveloping electronic payments
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SADC Payment Systems Project Launched July 1996
Funded by World BankSouth Africa
– 1993 NPS reform discussions– 1995 Strategic Framework published– 1996-1998 Development of SAMOS
Mauritius– 1991 to 1992 embarked on phased programme of
monetary policy reforms– 1993 NPS reform discussions
Zimbabwe– 1995 NPS reform discussions– Preceded by economic reform programme
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SADC Payment Systems Project
Phase One– Creation of awareness– Building of common language– Understanding current situation as foundation
for vision and strategy setting– BIS Publication ( Green Book 1996)
Phase Two– SADC future payment systems– Shared vision + documented strategy (1999)
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SADC Payment Systems ProjectPublications
– Green Book– Vulindhlela ( SADC Newsletter)– Strategy documents– Guide to Developing Payment Systems Reform– Requirements for SADC suitable RTGS system
Internet Connectivity– Interactive website
Capacity buildingMEFMI, World Bank, IMF, BIS
Payment systems agenda itemImproved payment systems environment
– Risk awareness
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SADC RTGS SystemsImplemented
– South Africa 9 March 1998 (92% gross settlement)– Mauritius December 2000 (66%)– Malawi 19 March 2002 (72%)– Namibia 10 June 2002 ( not available)– Zimbabwe 18 November 2002 (26%)
In progress– Tanzania
Selection process– 5 countries
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ChallengesInfrastructural constraints
Telecomms and Electricity ResourcesLegal issuesStandardsCountry specific policiesManagement of changeBuy inReform of securities settlement systemsResilienceScope of Oversight
how far do you go?
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QuestionShould we continue to strive for regional
initiatives given disparities?YES based on a number of considerations incl:
– Realised benefits– Benefits of synergy– Global trends cannot be ignored
– Search for financial stability• SADC subscribes to various initiatives
– E.g. Core principles for SIPS– Recommendations for SSS– FSAP
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Quote
“Payment and settlement systems are to economic activity what roads are to traffic:necessary but typically taken for granted, unless they cause an accident or unless bottlenecks develop”
BIS : Annual Report 1994
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Quote
“Its no good stopping the fraud in your own backyard, only for it to migrate to the country next door”
Bert Morris- National Westminster Bank
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CONCLUSION World never stands still. This is true of
payments and their clearing processesFinancial sector developments, expansion in
cross border capital flows as well as growth in foreign exchange transactions and securities trading are here to stay.
While we tackle the challenges posed by these developments, we must not lose the opportunities for innovation, investment as well as doing things better
Payment systems reform is a cooperative affair,without cooperation there would be no payment systems……..etc
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THANK
YOU
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RISK
