The Payment Systems Bill 2021 which is debated in Parliament this week is aiming to address the risks that exist in our current payments landscape.
The Minister of Finance and Treasury, Harry Kuma tabled the bill on Monday for its second reading following a number of delays since 2018 due to the need for proper scrutiny to ensure it is comprehensive and be able to meet its policy intentions.
The Bill once passed will ensure the Central Bank has the oversight and operational mandates to monitor the country’s payments environment.
“This way we are guaranteed safety, efficiency and responsibility as we go about performing our payments obligations,” Minister Kuma said.
The Bill also provides legal parameters on performances of payments to service providers whilst it ensures that customers are protected in the whole payments eco-system.
Kuma explained that while sections 25 and 26 in Part VI of the Central Bank of Solomon Islands Act 2012, give authority to the Bank to perform operational and oversight duties, this provision does not provide sufficient statutory authority for the Bank to execute its duties effectively.
Such incapacities in existing governance and legal structures in a payment environment that is ever changing, given the advent of technology, makes it more urgent than ever before to introduce a payments legislation to ensure safety, soundness and efficiency.
The Government has been supportive on this reform in order to establish a legislative framework to payments landscape.
“Without proper legislation, CBSI would not be effective in implementing the desired reforms encapsulated in the national payment system. Wherever we are located in the payments landscape, whether we are initiators of payments, recipients or facilitators or overseers, we must operate on a level playing field, and under the guidance of a legal framework,” Kuma said.
The Bill has four key objectives; first it provides CBSI the statutory authority to perform oversight over payment and other settlement systems;
Second, the Bill provides legal effects of transactions executed in conformity with the internal rules of those systems which have been either licensed or authorized by the CBSI according to the same provisions contained in the same statutory Act.
In other words, the legislation would bring the country at par with international standards in the conduct of payments both locally and globally. In so doing, it mitigates risks and inconsistencies that might affect the country’s reputation with adverse impact on the country’s trading with the global community;
Third, the Bill ensures all players in the payments landscape conduct payments responsibly and efficiently in a manner that does not disadvantage participants in the payment system.
Fourth, it necessitates the safe and efficient introduction of electronic payment and securities settlement systems and services in the country and for the proper assignment of the relevant responsibilities and powers of the CBSI.
These key elements in the Payments legislation will strengthen and improve the payments eco-system. Importantly, the payments legislations will allow the Central Bank to carry out its mandates responsibly as it supports the Central Bank in its overall objective of financial stability.
Once operational the Bill will also reduce the issue of delaying payments between Banks and the Government as it provides more efficient ways of moving towards faster transactions by moving money safely, efficiently and swiftly to clients and customers.
Debate on the bill continues.