Payments system reform: the Australian experience
Most central banks have some type of broad responsibility for oversight of the payments system. Often this responsibility is coupled with regulatory powers relating to high-value payments. In Australia, however, the responsibility runs much broader than this, encompassing the efficiency and competitiveness of the payments system as a whole, including retail payments. This responsibility was given to the RBA following a wide-ranging inquiry into the structure of financial regulation in the mid-1990s—the so-called Wallis Inquiry. This inquiry recommended that bank supervision be moved from the RBA to a stand-alone prudential regulator—today known as the Australian Prudential Regulation Authority (APRA)—but also recommended that the RBA be given responsibility for the overall efficiency of the payments system. This recommendation reflected, in part, recognition of the fact that the RBA was already highly enmeshed in the payments system and had considerable expertise in what are often highly technical matters. It nevertheless came as a surprise to us. We had not been arguing for an extension of our powers, and we had not been seeking responsibility for payments system efficiency. In accepting the committee’s recommendations, the government took the rather unusual step of establishing a second board within the RBA— the Payments System Board. This board is chaired by the governor and has Payments System Reform: The Australian Experience