National Payments System (NPS) Objectives
Following the CBN re-engineering and re-structuring processes in 1999, the second phase of payments system reforms were embarked upon with national payments system objectives clearly spelt out to include:
Promote efficiency. To be efficient and effective the framework for the payments system should Be transparent, flexible and reliable Ensure integration/interoperability of the sub-systems Speed up exchange and settlement of funds and securities Promote safety: Protecting systemic risks by: Containing credit, legal, liquidity and operational risks. Compliance with international standards and recommendations ( e.g. the ten core principles for Systemically important Payment Systems) Compliance with national standards and recommendations (e.g. Cheque and electronic banking standards). Migration to cash-less modes of payment, such as electronic debit/credit instruments, credit/debit cards, ATM-sharing and Electronic Fund Transfer at Point Of Sales and Real-Time Gross Settlement System (RTGS). Transparency: To run the NPS in a transparent manner as one of the factors militating against widespread usage of the formal payment systems is the concern of market participants about transparency. Consequently, NPS would spearhead procedures and technology that perform end-to-end audit-ability, full transaction reporting to regulatory and reporting authorities. In addition, the NPS would publicly disclose criteria for participation, in any payments solution, and permit fair and open access to all interested and qualified parties. Public Acceptance and Confidence. The NPS would initiate channels for effective information dissemination, customer convenience orientation and total quality delivery. In particular, the NPS would work towards widespread use of payment solutions for government payments, in many areas. The NPS would ensure that the legal and institutional arrangement is favorable to the achievement of its goals, and where such is not the case, appropriate regulations and review of guidelines would be undertaken from time to time in response to developments as the payment systems evolve. Integration with the financial infrastructure: In order to achieve the full benefit of well functioning payment systems, financial value should be able to flow from one market to the other in a seamless manner. Therefore, the NPS would be a major driver of changes in the financial markets, and would encourage collaboration and cooperation. As Nigeria moves towards a common monetary zone with five other West African countries, the reform of the existing payments process for compatibility, standardization and cross-border settlement becomes an imperative.
Read more about this topic: Central Bank Of Nigeria
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