General guidance for payment system development (consultation version)

09 May 2005

May 2005

Note: This document has been superseded by the final version of January 2006.


There is no single recipe for effective payment system development, but the questions countries undergoing a reform process ask themselves are largely similar. For example, who should be involved and who should initiate the process? What are the priorities in which to invest and are they based on a solid understanding of the payment system? What are the different infrastructures needed and what are their supporting institutional arrangements?

Answers to these questions are often sought in the publications of the Committee on Payment and Settlement Systems (CPSS). These publications provide expertise in payment systems and the consensus view of central banks. However, the priorities of CPSS countries need not be the same as those of other countries. Indeed, reform priorities differ from country to country based on the country's needs and capabilities.

Drawing on a comparison with the transportation system, buying the most expensive technology to build an airport can be pointless if the rest of the system is not sufficiently developed to make effective use of that airport. Or it may provide only a modest contribution to the overall transport system if most still use ground transportation. Indeed, the objective of the payment system, just like that of the transportation system, should be to develop an appropriate mix of infrastructures and an institutional framework to connect people in an efficient and safe way.

This report aims to give assistance in and advice on the planning and implementation of reforms in the payment system as a whole. It underlines that the central bank is always a driving force in the development of the national payment system. However, reforms in this field depend on a parallel development of the banking system, and should therefore be a cooperative effort, involving stakeholders from, for example, the banking sector and regulatory agencies. An adequate understanding of the different infrastructures and their institutional framework is needed and is indispensable for getting the priorities right.

The present consultative report includes 14 guidelines and accompanying explanatory text on payment system development. The report also includes implementation sections, which illustrate the guidelines with practical examples, issues and possible approaches to implementation. In preparing the report, the CPSS drew on the contribution of a working group, which consisted of a broad range of central bank experts from developed and developing countries around the world.

The CPSS is now releasing the guidelines in this report for consultation, and is seeking comments by 30 September 2005. We believe that wide participation in the consultation process would be beneficial and we therefore encourage any interested parties to submit their comments to the BIS ( The guidelines will then be reviewed by the working group, based on the comments received.

The CPSS is very grateful to the members of the working group, its chairman, Sean O'Connor of the Bank of Canada, and the CPSS secretariat at the BIS for their excellent work in preparing this report.

Tommaso Padoa-Schioppa, Chairman
Committee on Payment and Settlement Systems