Role of Retail Payment Systems
When discussing financial stability, liquidity of the financial and real sectors, or monetary policy, we very often take the financial infrastructure that is needed to execute transactions for granted. At first glance, dealing with payment and settlement systems does not necessarily seem the most appealing. Yet, sound, efficient, and safe payment systems are crucial for the functioning of the economy and must thus be taken with great consideration. Even more, for the reason that most of the money of economy runs through them.
It is in the mandate of most central banks to ensure smooth operation of payment systems through ensuring safe, effective and timely settlement of financial transactions. These are an inseparable part of economy’s financial infrastructure.
Major distinction of wholesale to retail payments is in individual transaction value and number of transactions. While the first are less numerous, they are much more significant and thus systemically important. Retail payment systems, on the other hand, handle large amount of payment transactions of lower value. Although the latter might not represent direct systemic risk, their effective and reliable provision is imperative for the functioning of the economy.
Its changing landscape and growing necessity for quicker, more cost effective, and safer provision requires constant adjustments of legal and regulatory framework. The regulators not only regulate and set the ‘rules’, but must also follow the market. The markets are shifting towards more contactless payments, mobile and online payments, digital currencies are emerging, etc. Cross-border payments are already a norm and there is a big tendency towards harmonization. At the same time, it is becoming more and more challenging to provide sufficient cybersecurity.
Being aware of its importance, we have been traditionally delivering learning events on the topic in cooperation with the Dutch Central Bank and the Bank of Slovenia. The upcoming workshop of Retail Payments on March 16–18, 2016 thus incorporates years of experience and successfully contributes to the regional capacity development and sharing of experience across the region.