Reserve Bank seeks tougher powers on payment systems
March 22 (BusinessDesk) - The Reserve Bank is seeking to strengthen its oversight over payment and settlement systems, and wants to bring the financial markets watchdog on side to help with securities market settlement systems.
The central bank is seeking submissions on proposals to bolster its oversight powers and give it the ability to impose penalties and management regimes for failing systems. The bank also wants to bring the Financial Markets Authority in to a co-regulatory arrangement, giving the market watchdog oversight of securities settlements.
"These additional powers will bring the Reserve Bank into line with other central banks, and better reflect the international regulatory developments in the payment oversight area, brought about by the global financial crisis," deputy governor Grant Spencer said in a statement.
"Improved oversight would also help to avoid any significant damage to the financial system that could result from the failure of a participant in a payment system, unlikely though that might be," he said.
Potential changes to the regime were flagged in last November's financial stability report, which highlighted a disruption to retail payments systems in April last year, and prompted a review to mitigate the impact of any future events.
New powers the Reserve Bank is pushing for include the ability to demand certain information, and the ability to impose warnings, directions and bigger financial penalties. The bank also wants to be able to remove directors for breaches, or appoint a statutory manager in the event of a systems failure.
Submissions close on May 3.