The Minister of Finance and Treasury, Harry Kuma has outlined risks in the country’s current payments system which necessitates the passage of the Payments System Bill by Parliament.
These risks are heightened by the fact that the advancement in technologies has provided many choices to people on how payments are conducted and while technology continues to evolve, safety and efficiency issues become increasingly important matters for consideration under various risk elements.
As highlighted by Minister Kuma, the first of the list of risks is Credit Risks where lenders offer credit lines to borrowers (or counterparties) as and when borrowers’ requests for credit and meet the lenders’ credit policy requirements. In the absence of appropriate legal parameters, a default in a payment obligation can have rippling effects on payment services and the country’s overall financial stability.
Second on the list is legal risks which the CBSI Act 2012 is insufficient to provide the Bank with mandates to implement functions that it is required to ensure there is sufficient oversight powers to administer payments system.
Third is the liquidity risk which means in a real time situation during payments settlement process, time critical payments may have adverse effects on the way credit is made available to liquid deficit institutions.
Fourth is cross-border transactions which means the abolishment of foreign exchange and capital controls in many countries in recent years have increased the movements of funds across borders and in the absence of prudent measures, catastrophic results could adversely affect a country’s economy.
Fifth is operational risks and sixth is Anti-Money Laundering requirements for good monitoring of the payments landscape.
These risks, according to Kuma requires the strengthening of the oversight and operations Roles of CBSI to prevent the country from lagging behind in payments systems.