Media Release Reform of Interbank Payments

For some time now, the Reserve Bank, the banks and the Australian Payments Clearing Association (APCA) have been discussing ways to reduce credit risks in interbank payments and keep up with international best practice in payments systems.

The Reserve Bank's current assessment of how best to pursue those objectives is outlined in the attached papers. In brief, they present the case for moving to a Real Time Gross Settlement (RTGS) payments system over the next few years, and propose a means of achieving this.

As well as affecting the way banks settle with each other, the proposals would change the way the Reserve Bank conducts its domestic market operations, and the role of the authorised dealers in the short-term money market.

The Bank proposals are being discussed with banks, authorised dealers in the short-term money market and APCA. These discussions are an integral part of the process of coming to final decisions on the changes to be made, as well as the detailed specification of such changes.

Once final decisions are made, it is expected to be some time before any new systems could be implemented. In the meantime, the Reserve Bank will maintain fully the existing arrangements with respect to the overnight cash market, and will continue to support the authorised dealers through the transitional arrangements.