FINANCIAL INFRASTRUCTURE WEEK 2015 AND CPMI-WORLD BANK RETAIL PAYMENTS FORUM DRAFT AGENDA

Transcription

1 FINANCIAL INFRASTRUCTURE WEEK 2015 AND CPMI-WORLD BANK RETAIL PAYMENTS FORUM DRAFT AGENDA DAY 1: Tuesday, September 1, Welcoming remarks from InterContinential the Coordinators of Hotel, the Financial Istanbul, Infrastructure Turkey Week 2015 and the CPMI-World Bank September Retail Payments 1 4, Forum 2015 The role of financial infrastructure to support financial inclusion Financial infrastructure is a core part of all financial systems. The quality of financial infrastructure determines the efficiency of intermediation, the ability of lenders to evaluate risks and of borrowers to obtain credit and other financial products at competitive terms. Financial access is the result of this complex interplay of intermediaries, infrastructure, and regulation. Serving the bottom of the pyramid will entail a two-pronged strategy: (i) fixing the financial infrastructure and put in place an enabling, non -discriminatory legal and supervisory environment, and (ii) leverage innovative approaches and private sector initiatives to increase the reach of financial infrastructure Retail Payments Forum Re-thinking the payment system architecture trends and opportunities Payment and settlement needs are evolving to adjust to financial sector trends such as the increased need for liquidity management, more robust risk management mechanisms, and support of regional economic integration. Technological innovation and the evolving payment needs are reshaping the architecture of payment system infrastructures. Modern technologies enable large volumes of payments to be processed faster and more cost-effectively, facilitate straight through processing and quicker back office processes. Users pull and regulators push have resulted in services, where the flow of information is separated from the interbank-settlement, providing users with a 24/7/365 instant payments experience. This panel will explore and explain these trends and the implications for operators, overseers, and catalysts Lunch

2 DAY 1: Tuesday, September 1, CRedit Reporting Credit scoring 101 Credit scoring is one of the key value-added services (VAS) that many sophisticated credit reporting service providers offer to their clients. By employing significant time, resources and expertise, raw credit and other data is used for analyses and interpretation. A variety of techniques, ranging from simple data aggregation and cross-referencing to complex statistical algorithms, can be employed to provide the lender with a simple interpretation of the information (e.g., a risk score). This session will present an overview of various credit scoring practices as they relate to consumers, firms and businesses. In parallel, the session will provide insights on rating and leading bureau scores. Insolvency Insolvency and nonperforming loans (NPL) resolution The latest global financial crisis put insolvency systems to the test as an effective mechanism to resolve NPLs. As the levels of NPLs generally increased, many countries reacted immediately by updating their insolvency systems to achieve a balance between protecting creditors recoveries indirectly linked to the stability of the financial system and at the same time enhancing debtors chances of restructuring. This session discusses why insolvency matters for NPL resolution and what actions countries have taken to improve their systems in the last five years. Retail Payments Forum New developments in retail payments: evolution or disruption? Adoption of e-payments can increase the economic growth as well as safety, efficiency, and convenience for the users. Successful technology innovations offer opportunities for new ways of payment initiation, improved authentication and efficient processing. New payment needs have led to new payment mechanisms and payments infrastructure created for one payment product has been successfully leveraged for other payment products. This panel will discuss the main trends in retail payments and why some innovative payment mechanisms ignite while others do not, the evolution of payments infrastructures, the recent flurry of interest in virtual currency schemes and, finally, the implications for the regulators Credit Reporting How much access is too much? The link between credit infrastructure and consumer protection One of the lessons from the recent financial crisis was the recognition of the problem of consumer over-indebtedness as a systemic risk and the consequent need for the modernization of domestic laws and institutions to enable jurisdictions to deal effectively and Secured Transaction and Collateral Registry Global experiences and latest results A recent empirical study shows that countries that have introduced a modern collateral registry have experienced considerable growth in access to credit (around 8%), better loan terms and lower interest rates (3% lower), and longer repayment Retail Payments Forum Security of retail payments: how to always be one step ahead of criminals Security aspects have always been a concern in relation to retail payments processing. New technologies in this area have allowed an increase in remote payments and the availability of services, which in many cases are offered on a 24x7 basis. These changes have sub- 2

3 DAY 1: Tuesday, September 1, (continued) efficiently with the attendant risks of abundant consumer credit. It is important to recognize the diversity of policy perspectives, values, cultural preferences and legal traditions that shape the way jurisdictions may choose to deal with the problems of individual over indebtedness. The session will discuss the importance of developing efficient systems to address this problem and the different models that countries have adopted to address the issue of consumer over indebtedness. periods (6 months). These reforms have also proven to be more beneficial to smaller and medium enterprises. In addition to the empirical evidence, a number of developed and emerging economies are embarking on secured transaction systems reform with the objective of strengthening financial infrastructure, increasing access to sustainable credit and strengthening prudent lending. This session will present some examples of the impact that these reforms are having in certain economies. stantially altered the risk profile associated with payment services. Security aspects are becoming increasingly important and, as services and threats become global, a coordinated approach across different jurisdictions seems warranted. This session will investigate the impact of new technologies on security risks and identify the main threats and initiatives to ensure adequate retail payment security, especially in relation to mobile and internet payments. DAY 2: Wednesday, September 2, Remittances as a gateway to financial inclusion International remittances are recognized as a window of opportunity to foster financial inclusion. If properly channeled and supported by financial education, remittances can be the gateway for a large part of the migrant population to gain access to other financial services. A number of policy makers pay attention to the enabling environment that fosters financial inclusion developing financial infrastructure, implementing financial education programs, improving the legal framework for example to allow non-banks to deliver remittances. At the same time, several problems can reduce the availability of the infrastructure for the delivery of remittances flows, thus hindering the correct functioning of the market, and preventing the inclusive potential of these important flows. This session will focus on good practices to use remittances as a gateway to financial inclusion and the lessons learned for scaling up the efforts. The session will also present the conclusions drawn by the World Bank Group on the international effort to reduce the cost of remittances, as an outcome of the so called 5x5 Initiative. Payment Systems Government payments as a catalyst for payment system modernization and financial inclusion As employers, providers of pensions and social assistance, and recipients of collections, governments are typically the single Credit Reporting Requirements for crossborder data flows and existing mechanisms Cross border businesses, and migration and regional economic integration are key factors that determine the need for credit reports to become available in more SEcured Transactions and Collateral Registries Delivering movables finance through value chains In the more matured markets, lending based on movable assets (movables lending) is often done through value chains. Actors along a value 3

4 DAY 2: Wednesday, September 2, (continued) largest users of domestic retail payment services. As such, the approaches governments adopt as they expand and enhance their use of electronic payments can impact the landscape of the retail payments market. Initially, government electronic payment programs were designed primarily to achieve cost savings, reduce leakage, enhance efficiency, and tighten public financial management. Increasingly, governments are designing their payment programs to support additional objectives including payment system modernization and financial inclusion. This session will explore the synergies between government payments and payments system modernization, the potential impact of government payment programs on competitiveness in the payments market, and means to leverage government payment programs to foster financial inclusion. than one jurisdiction. In addition, viable infrastructure solutions might require the storage of data in a jurisdiction different than the one where the services are rendered. These situations reflect the fact that under certain circumstances, cross-border data transfers can be considered a necessary instrument to facilitate the provision of credit. Cross border activities are associated with complex environment due to multiple applicable laws, credit cultures, institutional structures and data formats. This session will focus on the practical implications of this scenario, the role of the General Principles for Credit Reporting and the challenges and opportunities perceived by the market participants. chain are typically linked up by movements in accounts receivable and inventory as well as the associated information flows and social capital. Since practically all small and medium enterprises (SMEs) including agri-smes are on some value chains as suppliers or as buyers, movables lending to SMEs can be best structured along value chains. Lending institutions that have adopted such an approach have reaped major benefits in expanding market size, obtaining information on the borrowers, instituting desirable incentives, and reducing risks. Based on value chain networks (and often electronic platforms), lenders have also been able to efficiently offer non-credit services to their clients. This session will discuss the experience of several lenders in movables and value chain finance, and examine how donors and governments could help foster a vibrant movables financing market Lunch Implementing the General Principles for Credit Reporting In 2011, an internationally agreed framework for credit reporting was developed. Since then, some countries have adopted the new framework and have used the General Principles as a guiding document to ensure compliance with international standards during their reform processes. The role of central banks and other financial sector regulators has become critical for developing, overseeing, and operating credit reporting systems. Clear policies, defined roles, and the adequate implementation of the General Principles would guide authorities and other credit reporting system participants towards achieving the defined public policy objectives. This session intends to discuss the General Principles and implementation challenges in emerging markets and developed countries. 4

5 DAY 2: Wednesday, September 2, BREAKOUT SESSIONS Payment Systems Infrastructure requirements for card payments and their relevance for mobile money The design of payment card processing infrastructure has important implications for the efficiency and the expansion in the usage of payment cards. The typical arrangements include: leveraging the international card payment networks for domestic transactions, multiple independent domestic card payments networks, and a common national card payment network. Payment card infrastructure could also be leveraged to support interoperability for various innovative payment mechanisms like mobile money. This panel will deliberate on the different options for organizing the domestic card processing infrastructure, the emerging trends and the public policy considerations for the regulators that arise. Credit Reporting Demystifying Big Data and innovative scoring models and other value added services Usage of Big Data is becoming more pervasive, and its potential for international development is just beginning to be explored. Big Data availability has prompted many credit reporting service providers and other financial technology companies (FinTech) to consider utilizing these non-traditional sources of information to build innovative scoring models and other value-added services. Typically, Big Data includes structured and unstructured information. This session will provide a distinction between structured vs. unstructured Big Data, provide additional insights on the Big Data relevant for credit reporting, and present various innovative models employed by leading market players. Secured Transactions and Collateral Registries Implementing effective legal reforms - challenges and lessons learned A secured transactions framework can only truly work if the underlying legal platform is effective. Secured transactions reform must focus on creating a workable legal framework that governs creation, publicity, priority and enforcement of security interests. However, in many jurisdictions implementing such reforms proved to be challenging. This session will highlight the legal constraints that exist in various jurisdictions and will explore how these hinder the implementation of secured transactions reforms. The session will also focus on specific challenges faced in several markets during the reform process and the potential to overcome these challenges. DAY 3: Thursday, September 3, Financial Market Infrastructures The anchor to financial stability During the latest financial crisis, financial market infrastructures (FMIs) proved a source of strength. FMIs were instrumental in facilitating authorities immediate response, while giving market participants the confidence to continue transacting. However, important lessons in terms of more rigorous risk management, more robust governance, and stronger oversight of FMIs were learned and led to a comprehensive review and update of the relevant international standards, resulting in the 2012 Principles for Financial Market Infrastructures (PFMIs). Since then, further guidance has been provided on FMI recovery and resolution, and additional work streams were activated to review and update FMI risk-management tools. After nearly three years from the issuance of the PFMIs, this session aims to present and discuss the agenda after and beyond PFMIs, and to provide a global snapshot of PFMI implementation. 5

6 DAY 3: Thursday, September 3, Payment Systems New trends in derivatives clearing There has been continued progress on central clearing and trade reporting over the past few years. Key international policy standards have been finalized and a number of jurisdictions have completed the necessary reforms. This panel will discuss progress on central clearing and reporting to trade repositories of derivatives transactions in light of the international guidance on these issues. It will also discuss emerging regulatory and supervisory arrangements and challenges. Concrete examples of efforts to improve compliance with international standards and progress on G20 commitments will be discussed. This panel will host representatives of state-of-art infrastructure and leading regulators and supervisors. Credit Reporting Use of credit information for banking supervision Central banks tend to balance macro and micro prudential policies in order to maintain the stability and soundness of individual banks and the monetary system. Making individual institutions safe will not necessarily make the system safe as a whole, as in trying to make themselves safer, financial institutions can behave in a way that collectively undermines the system. Information on exposures between institutions and on exposures commonly held by them is likely to be crucial for macro prudential supervision. Detailed information on individual credit and loans is crucial to understand the credit portfolio and risk appetite of individual institutions. This session will discuss the role of credit reporting systems in banking supervision and financial sector regulation and the work that the International Committee on Credit Reporting (ICCR) has developed on this front. Secured Transactions and Collateral Registries Considerations, options and problems commonly encountered in design, development and delivery of application SW for registries (including live demo) Developers of application software, whether in-house or a private vendor, encounter unique situations that affect the design, development and delivery of the system. The situational variables that may bear on these phases include, among others, the information and communications technology (ICT) infrastructure of the country, the IT and administrative skill level and facilities of the implementing entity, the legal and political limitations on placement of the registry in an agency or with an outsourcer, the payment infrastructure of the country, the languages of business and the vernacular, the existence or non-existence of a legacy system, and most importantly, the secured transactions law under which the registry is to be implemented Lunch Secured Transactions and Collateral Registries A growth engine for micro, small and medium enterprises globally Secured Transactions and Collateral Registry reform has become an integral part of the access to finance and financial inclusion agenda of groups like the G20, the Asia-Pacific Economic Cooperation (APEC), the Association of Southeast Asian Nations (ASEAN), multilateral development agencies and bilateral donors. The financial crises and the liquidity crunch in many developed and emerging economies has led non-traditional lending mechanisms to be considered as valuable alternatives. There has never been more momentum for the introduction of improved movable lending regimes worldwide. Thought leaders in this area will provide their insights on how they see this key financial infrastructure piece develop in their respective economies, regions or industries. 6

7 DAY 3: Thursday, September 3, Payment System New models of payment system oversight The structural peculiarities of retail payment systems and their rapid pace of innovation compel overseers to adapt their strategies and policy frameworks. In this regard, it is critical for them to ask and address some pertinent questions: how do innovations impact oversight activities? Which policy issues confront the overseer? Are new regulatory and supervisory approaches needed? More complex and diverse retail payment structures and business activities, and broader public policy objectives financial inclusion, consumer protection, and competition - may require a re-scoping of oversight. Retail payment system oversight needs to extend to a much wider range of entities and relationships than is the case for large value payment systems, which in turn compels regulators and overseers to cooperate more efficiently. Payment System Regional integration of financial infrastructures The integration of financial markets has accelerated as the prospect of longterm economic, institutional and social gains from such integration has become more appealing to public and private stakeholders. As a result, greater attention is being given to the regional integration of infrastructures for payments, securities, and listed and over-the-counter (OTC) derivatives. In this context, a panel of international experts that were directly involved in many of these initiatives has developed, under the coordination of the World Bank, a set of practical guidelines to assist all relevant stakeholders considering the merits of an effort of this kind. The session will host the intervention of some of these international experts, who will highlight, with first-hand insights, concrete experiences and lessons learned. Secured Transactions and Collateral Registries Enforcement Security Interests have economic value only to the extent that a creditor can realize on the collateral in an inexpensive and timely manner in case of default. Jurisdictions that require long court proceedings provide little increase in access to finance for SMEs, while those that provide for balanced extra-judicial enforcement remedies create the legal incentives necessary to use a reformed secured transactions system. New legal procedures and technologies make recovering and disposing of the collateral more effective. This panel will discuss some of the most recent and successful reforms / international best practices to be followed by countries currently considering reform Reception Cocktail DAY 4: Friday, September 4, Keynote Address - How to successfully establish a Financial Market Infrastructure: the TARGET2-Securities (T2S) lessons of project-implementation and the first weeks of live operations Payment Systems Securities settlement systems Interoperability and harmonization are the main challenges faced by the post-trade infrastructure. This panel will discuss the work done to harmonize post-trade processes, in the light of two complementary initiatives in Europe, the Regulation on Settlement and Central Securities Depositories (CSDR), and the launch of T2S. 7

8 DAY 4: Friday, September 4, (continued) Euroclear will provide the perspective of a major FMI on the challenges and opportunities of interoperability and harmonization, including the latest enhancements to bridge settlement. The National Bank of Belgium, as lead overseer and lead prudential supervisor of Euroclear, will speak to the increased safety and efficiency of settlements, in particular for cross-border transactions. Finally, the Reserve Bank of India will present its integrated Core Banking Solution, and how this has increased the efficiency of securities settlement by leveraging technology, and enhanced safety through adherence to international standards. Credit Reporting Credit scoring - challenges Credit scoring is a statistical method of evaluating the probability of a prospective borrower to fulfill its financial obligations associated with a loan. The predictive value of credit scores is generally higher than that of assessments derived from credit histories alone. However, a credit score s relevance, and thus its predictive value, is higher when applied to an identified and homogeneous population of borrowers with regard to a specific product. The enormous potential of various credit scoring models aside, there are few important challenges behind the usage of these techniques that ought to be laid down and discussed. These issues include but are not limited to potential discrimination and misrepresentation. This session will aim to provide insights and relevant advice on these important issues. Credit Reporting Systems and Secured Transactions and Collateral Registries Interaction between credit reporting and collateral registries combined solutions There are clear synergies between creditors rights and tools to mitigate information asymmetries. Weak secured transactions framework and lack of information of borrower s loan repayment is frequently cited as a main financial constrains for SMEs. In particular the existence of a specialized registry that captures information on moveable collateral can complement or feed information on payment behavior captured by the credit reporting system which is used by creditors to make credit decisions. This session will present challenges and opportunities for developing a national strategy considering these two elements of financial infrastructure, and present empirical solutions undertaken in selected countries. Payment Systems Expanding usage of electronic payment mechanisms for corporate payments The field of corporate payments, i.e. those transactions that typically involve inter-company payments related to intermediate stages of production and trade, has been undergoing profound transformation in recent years. The corporate sector has been seeking to reap the benefits brought by the remarkable progress in payment and settlement infrastructures worldwide, and ICT. Cheaper, faster, and safer corporate payments systems would open up vast opportunities for increasing efficiency at all levels of economic activity. However, in many countries corporate payments have not benefitted fully from the ongoing payment systems developments. This panel will discuss the key trends, the implications for payment systems developments, and possible actions to expand the usage of electronic payment mechanisms for corporate payments. 8

9 DAY 4: Friday, September 4, Coffee break Credit information on small and medium enterprises: challenges and opportunities for credit reporting systems While information on credit and loans to individuals is included in most credit reporting systems, this is frequently not the case for information related to credit and loans to SMEs. SMEs, in particular the smallest ones, tend to rely on informal finance or internal resources and trade credit (accounts payable) to meet their long-term and short-term financing needs as they lack internal financial resources. Accounts payable allow for trade credit as a possible alternative for short-term financing. Trade credit terms are designed to prompt middlemen buyers to make choices between cash discounted and net payments, inclusive of an interest charge. While authorities try to develop strategies for increased lending to SMEs and SMEs recognize the constrains they face when accessing credit, policy decisions in this matter call for a review of: (i) regulatory environment covering aspects of information on SMEs; (ii) transparency from SMEs related to their financial information; (iii) availability of relevant data in public agencies, and; (iv) the role of credit reporting service providers in this area. This session will discuss the research paper developed by the International Committee on Credit Reporting (ICCR), and examine the challenges in evaluating the creditworthiness of an SME Concluding Ceremony Lunch 9