6 Months ending December 2009 Do some of the preliminary work. Set up work teams. Set up control mechanisms. Securities systems.

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1 SADC Payment System Integration Roadmap and Constraints Tim Masela 19 August 2011 Protea Balalaika Hotel, Sandton, South Africa

2 SADC Payment System Project Project Vision Each SADC country has : An efficient and effective payment system Internationally acceptable Interlinked within the region Supporting the SADC aims of : Free trade

3 SADC Payment System RISDP for 2018 (being revised) A single currency A SADC Central Bank This will entail a change in thinking from sovereign to regional

4 6 Months ending December 2009 Do some of the preliminary work Set up Steering Committee Set Standards Set up control mechanisms Set up work teams Monitor progress Report to Governors 12 Months ending December 2010 Develop the work teams Develop their scope Determine interfaces with the other disciplines Draft necessary documentation Develop legal framework Payment instruments Securities systems Clearing Settlement Build Infrastructure 42 Months ending June 2014 Develop the various requirements to enable the payments environment Constant interaction between the work teams Develop a harmonised legal framework Develop a harmonised card-based payment system Develop centralised securities settlement system Develop lowvalue payments framework Develop centralised settlement system Develop RTGS platform

5 12 Months ending June 2015 Develop the interfaces and have them tested Develop centralised collateral management system 18 Months ending December 2016 Test the system with the selected countries Integrated system tests for participants going live 18 Months ending June 2018 Activate the system in the selected countries Roll out to selected countries Beyond June 2018 Implement the system in the other countries as and when they are ready Phased-in roll out to remaining countries

6 SADC Payment System Project constraints Concerns about the feasibility of monetary unions Reaction to concerns Evaluate convergence criteria Additional and stricter controls Results Possible delays to the integration schedule

7 SADC Payment System Building a model possible role for CMA Can be used for various purposes including: Testing the system concepts of regional clearing and settlement Creating confidence in a regional settlement environment Identifying legal issues Breaking down barriers and misconceptions

8 CMA PAYMENT SYSTEM INTEGRATION PROJECT Steering Committee (The 3-man project team report to the CMA Governors) 2 times per annum The project team also reports to the SADC Governors 2 times per annum 12-Person Core Design Group to meet 7 times per annum Sub-group representatives attend SADC workshop and regional conference Legal Banking Association Fin Markets 25-Person SADC General Design Group to meet 2 times a year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CMA CCBG CCBG CMA 3 3

9 Models (phases) for CMA Integration

10 SADC Payment System Building a model possible role for CMA Possibly 3 phases: Model 1 Settle local transactions in-country Settle cross-border transactions in a central CMA system Banks will have individual accounts Model 2 Settle all transactions in a central CMA system Banks will have individual accounts Model 3 Settle all transactions in a central CMA system Banks will settle through their head office

11 Model 1 South Africa Namibia CMA Settlement FNB ABSA NFNB Bank W/hoek ACH NACH CMA Clear

12 Model 2 South Africa Namibia CMA Settlement FNB ABSA NFNB Bank W/hoek CMA Clear

13 Model 3 South Africa Namibia CMA Settlement Bank FNB ABSA NFNB W/hoek CMA Clear

14 Model of a regional ACH Country A Country B Settle ment Bank A Bank A ACH Bank B Bank B Banks in all countries and regional ACH can use IPF/SEPA Rules/CPSS standards/technical recommendations

15 Some of the issues

16 National RTGS interfaces with the central RTGS system Currency of settlement Transfer of funds between a commercial bank s account at its national central bank to bank s account at the central facility Liquidity provision Collateral is in a centralised or decentralised environment A feature to monitor at the national central banks, commercial banks positions at the central facility On-line prompts sent to the national central banks on out of funds positions of their commercial banks Reports available On the movement of funds in and out of a country per reporting period

17 QUESTIONS?