Reserve Bank of Australia - Payments System Board and The ACCC

Payments System Board and The ACCC

The Reserve Bank Act 1959 allows the Payments System Board to decide the Reserve Bank's payment systems policy. This is done so it can command risk and to aid in competitiveness and balance in the financial system. The Bank's power through the Payment Systems Act 1998 allows it to regulate any payment system and can create binding rules for security and performance in the system. If members of a payment system are at odds over issues of market risk, admission, safety, and rivalry, the RBA can additionally administer arbitration with the consent of those involved. The Reserve Bank is also permitted to gather information from a payment system or participants thereof. The Bank was also given the power to regulate the competition of transactions in August 2001.

The Payment Systems and Netting Act 1998 gives the Board power in areas of the law that were previously uncertain. It removed the zero hour rule that allowed a bankruptcy to date a bankruptcy the previous midnight and the Act made it so payments the same day could not be undone. Before the removal of the zero hour rule, the Real Time Gross Settlement system had been violated because payments in the system should inherently not be reverted. Some payments systems had previously agreed to pay and receive obligations to the whole system, rather than merely maintaining their own. But in the event of a bankruptcy, the bankrupt institution did not pay what it owed back to the solvent parties, while they had to pay their dues to the failed bank. This was later changed, when cheques were deemed void if the bankrupt institution doesn't have the funds to back them up, after the Cheques Act 1986 was amended in 1998. The Trade Practices Act 1974 generally does not allow competitors to make cooperative agreements, but if The Australian Competition and Consumer Commission (ACCC) is permitted to make exceptions for competitors making agreements among themselves. The ACCC and the Payments Systems Board are encouraged to work together regarding access and rivalry through the Payment Systems (Regulation) Act 1998.

Members of the Payment Systems Board are defined by Section 25A of the Reserve Bank Act 1959, with three of the members being ex officio or representatives of another organisation. The Governor of the Reserve Bank of Australia is the Chairman of the Payments System Board, there is one representative of the RBA, and there is one representative of the Australian Prudential Regulation Authority (APRA). In addition, there are up to five other members of the Board that are appointed by the Treasurer for a term up to five years in length. They meet once per quarter, with five members forming a quorum, and one meeting per year is generally held in Melbourne, while the rest are held in Sydney. The Chairman is to meet with the Chairman of the ACCC at least once annually on issues of interest to both parties in the payments system, in addition to members of both organisations consulting over issues that are mutually important.

The current members of the Payments System Board are: