SADC Payment System Integration Project

SADC Payment System Integration Project Presentation to AMEDA 25-27 April 2012

SADC Payment System Project - Domestic Project Vision • Each SADC country has : • An efficient and effective payment system • Internationally acceptable • Interlinked within the region • Supporting the SADC aims of : • Free trade

Payment, Clearing and Settlement Systems • Different approaches to Modernisation • Pure strategic approach • Model-based approach • Operational approach • Achievements

INFO & STOCKTAKING VISION & STRATEGY CONCEPTUAL DESIGN BUS. PROC SPECS TECHNICAL SPECS DEVELOP/ PROCURE LAUNCH SENSITISATION IMPLEMENTATION IMPLEMENTATION SADC Modernisation so far ANGOLA BOTSWANA DRC LESOTHO MADAGASCAR MALAWI MAURITIUS MOZAMBIQUE NAMIBIA SEYCHELLES SOUTH AFRICA SWAZILAND TANZANIA ZAMBIA ZIMBABWE

SADC Payment System Project - Regional Project Vision • Each SADC country has : • An efficient and effective payment system • Internationally acceptable • Interlinked within the region • Supporting the SADC aims of : • Free trade

SADC Payment System RISDP – for 2018 (being revised) (Regional Indicative Strategic Development Plan) • A single currency • A SADC Central Bank • This will entail a change in thinking from sovereign to regional

SADC Payment System • Building a model – possible role for CMA based on the Rand as a settlement currency • Can be used for various purposes including: • Testing the system concepts of regional clearing and settlement • Creating confidence in a regional settlement environment • Identifying legal issues • Breaking down barriers and misconceptions

SADC Payment System • Building a model – possible role for CMA • Possibly 3 phases: • Model 1 • Settle local transactions in-country • Settle cross-border transactions in a central CMA system • Banks will have individual accounts • Model 2 • Settle all transactions in a central CMA system • Banks will have individual accounts • Model 3 • Settle all transactions in a central CMA system • Banks may settle through their head office to centralise their Treasury functions pool liquidity

Model 1 South Africa Namibia CMA Settlement NFNB Bank W/hoek ABSA FNB NACH ACH CMA Clear

Model 2 South Africa Namibia CMA Settlement NFNB Bank W/hoek ABSA FNB CMA Clear

Model 3 South Africa Namibia CMA Settlement Bank W/hoek NFNB ABSA FNB CMA Clear

SADC Payment System • Building a model – possible role for CMA • Going forward: • Model 1 can be achieved at relatively low cost • Minimal expenditure on equipment and systems • Initial CMA Settlement feature hosted by SARB using a ring-fenced infrastructure • If approved – work to start early 2012

SAMOS Participant Bank to SAMOS Participant Bank Payments MT/103MT202 MT103./MT202 SWIFT FIN ZDS Copy Service SAMOS Participant Bank SAMOS Participant Bank MT097 MT096 SAMOS Bank A SAMOS Bank B Cr Dr

CMA Domestic Bank to CMA Domestic Bank Payments MT/103MT202 MT103./MT202 SWIFT FIN Copy Service Domestic Participant Bank Domestic Participant Bank MT097 MT096 Domestic Bank A Domestic Bank B Cr Dr

SAMOS Participant Bank Proposal to Fund SIRESS Accounts MT202 SWIFT FIN ZDS Copy Service 1 CMA Participant Bank MT202 4 MT910 2 MT097 6 MT096 SAMOS SIRESS 3 5 SIRESS Account SAMOS Account CMA Bank SAMOS Bank 5.1 5.2 3.1 3.2 15 QB March 2011

SAMOS Participant Bank to CMA Participant Bank Cross Border Payments Bypass SAMOS system (Normal settlement between CMA Banks) MT103./MT202 MT103./MT202 1 6 2 SWIFT FIN RESS Copy Service SAMOS Participant Banks CMA Participant Banks 5 3 MT096 MT097 4 SAMOS Bank CMA Bank Dr Cr

Utilising funds in the Settlement account • Receive payments from counterparts • FX deal • Interbank loans

Proposal for Phase 1 of the integrated system • Keep the system as simple as possible • No collateralised loans provided for in the system • Key considerations • Promote interbank loans • Central banks to assist clearing banks in their jurisdictions to access liquidity as far as possible

SADC BA Stakeholders

SADCBA Organizational structure

End – Thank You

SADC Payment System Integration Project