Page 19 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

4 Roles of public and private sector actors in achieving the vision for the
NPS/financial inclusion

Payments reforms require the active and often continuous involvement of several stakeholders from the public
sector and the private sector. This section describes their main roles.

4.1 Central Bank oversight and other roles

Central banks all over the world are heavily involved in the operation, regulation and oversight, and reforming
of payment systems.

In an operational role, central banks typically provide settlement services for some or all retail payment
systems in a country. In some countries, central banks also play a more direct operational role and operate
some retail payment systems like check clearing houses, automated clearinghouses (ACHs) and/or payment
card switches. Through this operational role, a central bank can be instrumental in facilitating interoperability
of payment instruments and services.

As facilitators/catalysts, most central banks maintain close relationships with commercial banks and other
PSPs in order to discuss priorities for payment system development within the country and to promote that
those priorities materialize (e.g. achieving interoperability). Through these relationships, central banks also
pursue development of strategic initiatives aimed at benefiting all participants uniformly (e.g. connectivity,
adoption of standards, fair interchange fees/fee structures, reduction or elimination of paper and paper-based
processes, etc.).

As overseers and/or regulators of retail payments, central banks typically monitor existing and new payment
systems and services, assess them against relevant standards and best practices, and where necessary induce
change. The latter can occur through dialogue and moral suasion, through the issuance of formal regulations,
and/or by launching reform initiatives of varying depth. In their oversight role, many central banks also pursue
a research agenda to keep abreast with new developments in both the local and foreign contexts.

4.2 Role of other public sector entities

Other public sector entities increasingly play a role in the NPS and in some cases also in the efforts to reform
one or more of its elements.

Financial supervisors (when different from the central bank) and telecom regulators may play a role as
regulators for certain specific components and/or participants of the NPS. In Pakistan, for example, the Pakistan
Telecommunication Authority, in close cooperation with the State Bank of Pakistan, have cooperated closely
on the development of regulatory framework for mobile / branchless banking. Recently, both institutions
issued joint regulations on the technical implementation and interoperability of mobile / branchless banking.
Other public sector entities like the ID authority (i.e. the entity that issues national identification number
or equivalent for the population) is increasingly playing a critical role in the payments field, especially for
facilitating access to individuals excluded from the financial sector and (often) from the formal economic
sector in general. Likewise, competition authorities are increasingly playing a role in DFS in some countries,
for example by monitoring ex ante mergers & acquisitions as well as sanctioning of anti-competitive behavior
in this field.

Finally, other public sector entities may be involved because they are heavy users of payment services (e.g.
the national treasury, the agency that operates social grants programs, the social security agency, etc.) and
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are therefore interested in leveraging payments reforms to better fulfil their own statutory mandates and
objectives.

5 Many social security institutions directly collect contributions and disburse benefits like pensions and others.

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