Payment Systems in Australia

June 1999

The Committee on Payment and Settlement Systems (the CPSS) of the central banks of the Group of Ten countries periodically publishes - under the aegis of the Bank for International Settlements - a reference work on payment systems in the G-10 countries known as the "Red Book", with regular statistical updates. The CPSS has also invited central banks in a number of countries where important developments in payment systems are under way to publish - in collaboration with its Secretariat at the Bank for International Settlements - separate "Red Book" studies for their country. This is the second edition of the "Red Book" for Australia.

Central banks in many countries have been influential in improving the public understanding of payment system arrangements in their countries and of the various policy issues connected with such arrangements. Just as central banks have an interest in the retail money transfer systems used by businesses and consumers for commercial purposes, so also do they have a specific interest in large-value inter-bank funds transfer systems that underpin the money and credit markets of market-orientated economies. In addition, major settlement systems include so-called exchange-for-value systems that are increasingly used for settlement of securities transactions. Public interest in issues relating to both the economic efficiency and financial risks in all types of payment and settlement systems has continued to increase in recent years.

Payment system reform and improvement is necessarily an ongoing process in all countries. In Australia, there have been important changes to the payments system since the first "Red Book" for Australia was published in 1994. Of particular note, real-time gross settlement for high-value payments was introduced in June 1998, while in July 1998, a Payments System Board was established at the Reserve Bank and given wide-ranging statutory powers to regulate Australia's payment systems to control risks and promote efficiency and competition.

We hope that this revised edition of the "Red Book" will continue to contribute to the understanding of the payment and settlement system in Australia, both domestically and internationally.

Wendelin Hartmann, Chairman Ian Macfarlane, Governor
Committee on Payment and Settlement Systems Reserve Bank of Australia
Member of the Directorate of the Deutsche Bundesbank