The Reserve Bank of Australia is stepping up its focus on financial stability in the nation’s payment system and embracing greater innovation on transactions, Governor Glenn Stevens said.
“The board’s mandate in relation to financial stability remains a key focus, and the global response to the financial crisis dictates that we take on a greater, and probably more complex, role as the global focus shifts to centralized financial market infrastructure,” Stevens said in the text of a speech in Sydney today. “This doesn’t mean that the board will be paying less attention to the payments system efficiency matters for which it is perhaps best known.”
Stevens didn’t address monetary policy or the outlook for the economy in the speech to the Australian Payments Clearing Association. He said the nation’s approach to retail payments that make funds available the next business day needs to be overhauled.
“This has served acceptably well to date, but, with systems for real-time transfers available in countries ranging from the United Kingdom to Mexico, Australia’s approach is starting to look a bit dated,” Stevens said. “It is our belief that availability of real-time transfers would fill some important existing gaps, but would also open up enormous potential for innovation on top of that system.”
The RBA is due to release its strategic review of innovation in the next couple of weeks, Stevens said today.
“The financial stability element of the Payments System Board’s role is only going to increase,” he said. “This is a continuation of a trend that has been under way for some time, and to which we have already responded with a significant boost in the resources we devote to these issues within the bank.”
The RBA on May 1 lowered the overnight cash rate target to a two-year low of 3.75 percent from 4.25 percent, the deepest reduction in three years, after two quarter-point cuts late last year. Traders are certain the RBA will cut the rate again at next month’s meeting, swaps data compiled by Bloomberg show.
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