Regional Experience on Clearing and Settlement Systems

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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

Text of Regional Experience on Clearing and Settlement Systems

  • Regional Experience on Clearing and Settlement Systems

    Johannesburg 19 June 2003 Alice ZanzaReserve Bank of Zimbabwe

  • Relevance of clearing and settlementsTrading has to be settled BarterCashElectronic paymentsInvestor confidence in the payment systemFinancial stabilitySystemic risk

  • Systemic RiskThe risk that the failure of one participant, in financial markets generally, will cause other participants to be unable to meet their obligationsEffects:Significant liquidity problemsThreat not only to whole financial sector but economy as a wholeNightmares for the Central bank

  • Components of Payment SystemBanks Financial InstitutionsGovernmentRules and RegulationsProcesses and ProceduresLegal FrameworkInfrastructureTransactions ( Payment and Settlement)End users/ CustomersService ProvidersOther Stakeholders

  • Building Safe and Efficient Payment SystemCombined action by central bank and banking industryShared visionCooperation from other stakeholdersClear cut division between Competition and CooperationTechnical efficiencyCompatibility with monetary policyAccess criteriaCompatibility with payment systems from other countries

  • Building Safe and Efficient Payment SystemDriver Support from the topTroublemakerLong term approach Avoid quick fix Commitment, commitment and commitmentContinuity

  • Goal DefinitionGross SettlementOne to oneHigh value paymentsHigh liquidity requirementsLow riskCredit pushNet settlementLower liquidity requirementsHigher riskLegal basisHigh and low value paymentsClearing CyclesSettlement TimeEnd of dayDeferred

  • 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 2002Central Securities DepositoryGovernment securities vs EquitiesImmobilisation / Dematerialisation

  • Regional TrendsMEFMI (10 )AngolaBotswanaLesothoMalawiNamibiaSwazilandTanzaniaUgandaZambiaZimbabweSADC (14)AngolaBotswanaLesothoMalawiNamibiaSwazilandTanzaniaZambiaZimbabweDRCSeychellesSouth AfricaMauritiusMozambique

  • SADC REGION

  • SADC Developments9 million SQ KmEstimated population of 190 millionDiverse capabilitiesDominant use of cashWide use of chequeCredit transfers and direct debitsPayment cardsDeveloping electronic payments

  • SADC Payment Systems Project Launched July 1996Funded by World BankSouth Africa1993 NPS reform discussions1995 Strategic Framework published1996-1998 Development of SAMOSMauritius1991 to 1992 embarked on phased programme of monetary policy reforms1993 NPS reform discussionsZimbabwe1995 NPS reform discussionsPreceded by economic reform programme

  • SADC Payment Systems ProjectPhase OneCreation of awarenessBuilding of common languageUnderstanding current situation as foundation for vision and strategy settingBIS Publication ( Green Book 1996)Phase TwoSADC future payment systemsShared vision + documented strategy (1999)

  • SADC Payment Systems ProjectPublicationsGreen BookVulindhlela ( SADC Newsletter)Strategy documentsGuide to Developing Payment Systems Reform Requirements for SADC suitable RTGS systemInternet ConnectivityInteractive websiteCapacity buildingMEFMI, World Bank, IMF, BISPayment systems agenda itemImproved payment systems environmentRisk awareness

  • SADC RTGS SystemsImplementedSouth 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 progressTanzaniaSelection process5 countries

  • ChallengesInfrastructural constraintsTelecomms and Electricity ResourcesLegal issuesStandardsCountry specific policiesManagement of changeBuy inReform of securities settlement systemsResilienceScope of Oversighthow far do you go?

  • QuestionShould we continue to strive for regional initiatives given disparities?YES based on a number of considerations incl:Realised benefitsBenefits of synergyGlobal trends cannot be ignored

    Search for financial stabilitySADC subscribes to various initiatives E.g. Core principles for SIPSRecommendations for SSSFSAP

  • QuotePayment 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

  • Quote

    Its no good stopping the fraud in your own backyard, only for it to migrate to the country next doorBert Morris- National Westminster Bank

  • 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 betterPayment systems reform is a cooperative affair,without cooperation there would be no payment systems..etc

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  • RISK

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