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The central bank's role in payment system development

Author

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  • Heikkinen, Päivi
  • Tómasson, Guðmundur Kr.

Abstract

Central banks have traditionally acted as real-time gross settlement (RTGS) operators for interbank settlement, as well as overseers of critical financial market infrastructure. The importance of electronic retail payments has grown substantially during the past decade. This has meant a redefinition of critical payment systems and has also brought important retail payment systems under oversight. To promote efficiency, in some cases, central banks have also acted as a catalyst for new payment systems. We argue that digitalisation, financial integration and excess inertia in the market demand a more active role by central banks than the one hitherto adopted. Setting mandatory standards, accreditation of solutions, shared technical infrastructure with retail payment systems and even issuing electronic cash should be considered to ensure that the smooth operation of payment systems continues in future. The scope of this paper is European.

Suggested Citation

  • Heikkinen, Päivi & Tómasson, Guðmundur Kr., 2016. "The central bank's role in payment system development," Journal of Digital Banking, Henry Stewart Publications, vol. 1(2), pages 153-160, September.
    • Handle: RePEc:aza:jdb000:y:2016:v:1:i:2:p:153-160
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    More about this item

    Keywords

    payment system development; central bank oversight; central bank catalyst;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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