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Payments System Board Update: February 2021 Meeting

Summary:
At its meeting today, the Payments System Board discussed a number of issues, including: The Bank's Review of Retail Payments Regulation. The Board discussed some recent industry developments that are relevant to the Review, particularly relating to dual-network debit cards, least-cost routing, and scheme fees. The staff are continuing to gather information and consulting with stakeholders. It is expected that the Board will agree on draft conclusions for the Review at its May meeting, for publication soon afterwards. Cyber risks to the Australian payments system. Members were briefed on the work being undertaken by the Bank (together with other CFR agencies) to oversee the management of cyber security risks in the financial sector. They

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At its meeting today, the Payments System Board discussed a number of issues, including:

  • The Bank's Review of Retail Payments Regulation. The Board discussed some recent industry developments that are relevant to the Review, particularly relating to dual-network debit cards, least-cost routing, and scheme fees. The staff are continuing to gather information and consulting with stakeholders. It is expected that the Board will agree on draft conclusions for the Review at its May meeting, for publication soon afterwards.
  • Cyber risks to the Australian payments system. Members were briefed on the work being undertaken by the Bank (together with other CFR agencies) to oversee the management of cyber security risks in the financial sector. They discussed how the Bank can best support cyber resilience in the payments system in the context of the Government's recently announced Cyber Security Strategy.
  • Treasury's Review of the Australian Payments System. Members discussed the key themes raised by stakeholders in the recently published submissions to the Review.
  • Operational incidents at ASX. The Board discussed the continuing work of the Bank and the Australian Securities and Investments Commission examining whether there are systematic issues underlying several incidents experienced by ASX in late 2020; this includes oversight of an independent review commissioned by ASX, expected to be completed in the first half of the year.
  • International research on central bank digital currency (CBDC). Members discussed the work that is taking place internationally on CBDCs, including the development of proofs of concept by some central banks. The Board is following this work closely but continues to be of the view that there is not a strong public policy case at present for issuance of a retail CBDC in Australia. The Bank is continuing its collaborative research project on a wholesale CBDC with a number of external parties, which is due to be completed in the coming months.
  • Recent developments in the buy now, pay later (BNPL) market. BNPL transactions have been growing strongly and there is increased competition in the market associated with new entrants and different business models. As part of the Bank's Review of Retail Payments Regulation, the staff are consulting with stakeholders on the issue of the no-surcharge rules that some BNPL providers impose on merchants.
  • The Bank's self-assessment under the Regulator Performance Framework. This will be published in coming weeks.
Reserve Bank Australia
The Reserve Bank of Australia (RBA) came into being on 14 January 1960 as Australia's central bank and banknote issuing authority, when the Reserve Bank Act 1959 removed the central banking functions from the Commonwealth Bank. The bank has the responsibility of providing services to the Government of Australia in addition to also providing services to other central banks and official institutions. It currently consists of the Payments System Board, which governs the payments system policy of the bank, and the Reserve Bank Board, which governs all other monetary and banking policies of the bank.

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