2005 Self-assessment of the Reserve Bank Information and Transfer System Core Principle X

The system's governance arrangements should be effective, accountable and transparent.

10.1 Assessment of Compliance

RITS complies with this principle.

RITS is owned by the Reserve Bank and operated as a functional area of the Reserve Bank – it is not a separate entity. The management and operation of RITS fall under the governance structure of the Reserve Bank, and are subject to its normal Reserve Bank Board oversight, decision making and audit processes.

10.2 Governance of the Reserve Bank

The Governor and Deputy Governor of the Reserve Bank are appointed by the Australian Government in accordance with the Reserve Bank Act. The Governor is the chief executive of the Reserve Bank (as an independent statutory authority) and chairman of the Reserve Bank Board and Payments System Board. The Governor reports to these boards and is accountable for the policy decisions and performance of the Reserve Bank.

The Governor and other Reserve Bank executives appear biannually before a parliamentary committee (the House of Representatives Standing Committee on Economics, Finance and Public Administration). This Committee may ask the Governor and other Reserve Bank executives questions on aspects of the Reserve Bank's functions and responsibilities. The Committee is responsible for monitoring the Reserve Bank and ensuring its transparency and accountability to Parliament, the financial sector and the community as a whole. Reports of the Committee are tabled in the House of Representatives.

10.3 Decision Making

RITS is owned and operated by the Reserve Bank. Decisions affecting the day-to-day operations, customer relations and enhancement of RITS are the responsibility of Payments Settlements Department.^[1] Decisions concerning the operation of RITS and ESAs are consistent with the policy environment determined by Payments Policy Department and the senior executive of the Reserve Bank (Executive Committee).

Payments Settlements Department is part of the Reserve Bank's Business Services Group, which is headed by an Assistant Governor and is subject to frequent operational audits conducted by the internal audit area of the Reserve Bank.

Major decisions that may require significant expenditure, or have policy implications, are considered by the Reserve Bank's Executive Committee.

10.4. Consultation

Consultation with users and other parties is the responsibility of the Planning & Client Relations Group of Payments Settlements Department. This group liaises with system users and prospective change to the system is discussed through this forum.

For specific projects, operational or technical working groups are typically formed, incorporating both staff and user representatives, to facilitate the implementation of the change and gain feedback from users.

10.5. Transparency

All decisions affecting the operation of RITS are advised to participants. Policy decisions that impact upon RITS are also advised by media release. Major decisions and the reasons for them, are explained in the Reserve Bank's annual report.

The Reserve Bank website provides a description of the payments system, the Reserve Bank's Payments Policy Department objectives and initiatives, and a detailed description of the Reserve Bank's operational role. This includes a description of ESAs and their eligibility requirements, details of securities that can be used in overnight and intraday repurchase agreements, and the mechanics of how these are used to generate liquidity.

The website also includes statistics on RTGS transactions and media releases and other publications relating to payments system matters.

10.6. Oversight and Audit

The Payments System Board of the Reserve Bank is responsible for payments system oversight. While RITS is owned and operated by the Reserve Bank, it is, as are other payment systems, subject to the Payments System Board's oversight.

While, as set out in section 10.3, the day-to-day operation of RITS and enhancements to the system are operational matters for the Reserve Bank, the Payments System Board is periodically updated on developments. The areas responsible for oversight (Payments Policy Department) and operations (Payments Settlements Department) meet regularly to discuss policy issues and operational developments.

RITS is subject to the normal audit procedures applying to the Reserve Bank. The Reserve Bank Audit Committee, comprising the Deputy Governor of the Reserve Bank as Chairman, a non-executive member of the Reserve Bank Board, and an external appointed member, meets quarterly. Minutes of the Audit Committee are circulated to the Reserve Bank Board and discussed as appropriate.

Footnote

Clear procedures are in place to elevate day-to-day operational matters within Payments Settlements Department and other areas of the Reserve Bank, as appropriate. [1]