Reserve Bank deputy governor Grant Spencer is signalling a new supervision regime for the country's payments system, two years after he first outlined concerns about the global infrastructure that facilitates wholesale market transactions.
New Zealand's legislation for overseeing the payments system is no longer fit for purpose and the Reserve Bank has developed a new framework to oversee the sector, which is still waiting for Cabinet approval, Spencer told the Payments NZ conference in Auckland.
The key features of the framework would grant the central bank and Financial Markets Authority information-gathering powers to better identify emerging risks and place large payment and settlement schemes, known as financial market infrastructures (FMIs), under a new regime allowing greater scrutiny from regulators.
The risk posed by FMIs relates to the fact their home jurisdictions govern how a failure would be managed, Spencer said, when he outlined concerns two years ago.
The proposed new framework focuses on processes for crisis management leading to a return to normal operations and would give the RBNZ and FMA tools to respond if an FMI fails or is poised to fail.
