Electronic Funds Transfer

Transcription

1 Electronic Funds Transfer Iqbal Ali Khamis February 16, 2004

2 Agenda Background Current Systems Types of Risks BIS Core Principles CBO Approach Payments Strategy Strategy Overview Benefits

3 Background Off line Cheques Clearing Off line Inter-bank Settlements End of Day Balances

4 Current Systems Heavy dependence on Heavy cash dependence on Time lag cheques for funds availibility Relatively few bank branches on line

5 Types of Risks in Payment Systems Credit Risk: Party within system unable fully to meet financial obligations Liquidity Risk: Party within system has insufficient funds to meet financial obligations Legal Risk: Poor legal framework or legal operational risk

6 Types of Risks in Payment Systems Operational Risk: Factors such as technical malfunctions or operational mistakes Systemic Risk: Inability of one of the participants to meet its obligations, or a disruption in the system itself, could result in the inability of other system participants to meet their obligations

7 BIS Core Principles I. Well-founded legal basis. II. Clear understanding of impact of rules and procedures on financial risks. III. Clearly defined procedures for management of credit & liquidity risks. IV. Provide final settlement on value day. V. Ensure timely completion of daily settlement. VI. Assets used for settlement should carry least credit and/or liquidity risk.

8 BIS Core Principles VII. High degree of security and operational reliability with contingency arrangements. VIII. Provide practical and efficient means of making payments. IX. Objective and publicly disclosed criteria for participation. X. Governance arrangements should be effective, accountable and transparent.

9 CBO Approach Appointed Consultant Studied Local Market Met all banks and government entities Produced Report Report on Payment Systems Strategy For the Sultanate of Oman Version 1.20 April 2003 Central Bank of Oman

10 Payments Strategy ATM/POS Cheques RTGS DvP PvP ACH

11 RTGS Real Time Gross Settlement Used for daily settlement of inter-bank positions Transfer and settle in real-time continuously Payment instructions passed between banks and CBO by on-line links. All settlements final and irrevocable

12 Example of RTGS Transaction Process 1 Extranet VPN 2 3 4

13 ACH Automated Clearing House Used for bulk processing of electronic credits and debits Such transfers could include Salary payments by employers Regular remittances by individuals Payment of dividends to shareholders Direct debits from utility companies Direct debits for loan installments

14 ATM/POS OmanSwitch Will accommodate ATM, POS and other card-based transactions Handle transactions initiated throughout Oman Linked in real time to similar systems in GCC countries Net settlement processed through RTGS

15 Cheques Cheques Clearing & Settlement Image based cheques clearing Continuous and instantaneous settlement Net settlement processed through RTGS

16 DvP Scripless Securities & Delivery versus Payment Used for settlement of transactions in Government securities Money market instruments Equities and corporate securities Will ensure delivery of title to purchaser only upon final and irrevocable payment through RTGS

17 PvP Payment versus Payment Used for simultaneous settlement of both ends of Foreign Exchange transactions Will ensure payments are effected simultaneously and with finality through RTGS

18 Strategy Overview DvP RTGS GL ATM/POS ACH PvP Cheques Extranet VPN

19 Benefits Support for economy and financial markets Support for New Products and Services Support for e-government initiatives Reduction in Cheque volumes Reduction in Risk Reduction in Costs Improved ability to remit funds to and from overseas

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