1 Keynote Speech
SEACEN PAYMENT SYSTEM DIRECTORS’ MEETING Yogyakarta, November 29, 2007
S. BUDI ROCHADI
DEPUTY GOVERNOR, BANK INDONESIA
Distinguished Mrs. Lim Lai Hong, the Director of Training and Administrator, SEACEN Centre Distinguished Payment System Directors from all SEACEN and observing countries,
Distinguished Speakers, Ladies and Gentlemen,
Good afternoon,
Assalamualaikum wr.wb, may the blessing of the Almighty be bestowed upon all of us.
Welcome to Yogyakarta!
Almost a year ago, I was appointed as Bank Indonesia Deputy Governor. With the appointment the payment system has become part of my responsibilities, besides the currency circulation and two other sectors namely rural bank supervision and credit. The payment system and currency circulation are two different areas involving different methods of payments and different payment instruments, each with its own challenges which are quite different from one another.
Our Payment System Department has brought to me many plans for the future. One of the plans is building the second generation of Bank Indonesia RTGS System. When we look around the region, we can see that some of our colleagues, like the Monetary Authority of Singapore, the Bank of Thailand, and the Reserve Bank of Australia, have finished bringing their 2nd generation RTGS to live. At the present, Bank Indonesia is on the way to do the same.
2 Indonesia’s mandates that is “ensuring the smooth functioning of payment systems”, which is of utmost importance to support the financial system and monetary stability.
Therefore the first theme of this meeting, which emphasizes on the evolution of large-value payment systems, will be highly beneficial for us. Moreover it will also benefit those who are planning to revamp their current RTGS setups, and even to those who just start the first generations.
Ladies and Gentlemen,
The second theme, which is on retail payment landscape, is also a great policy subject. Within Bank Indonesia we have been discussing many policy issues including that of regulating the issuance of e-money, both issued by banks and by non-bank non-financial institutions.
The introduction of e-money is a logical consequence of the advancement of technology, which is supposed to make our lives easier. However, to regulators like us new technology such as e-money besides being a blessing, it could also impose new challenges. Some of the challenges would arise when the time comes when people start using e-money for economic transactions across the borders of countries. Although it might be too early to predict, I have a feeling that there would be some aspect of e-money that may require cross-border collaboration amongst payment system regulators and overseers. Hence, directors’ meeting such as this one that is organized by SEACEN Centre can become an ideal forum for such collaboration.
Ladies and Gentlemen,
Another policy issue in retail payments that has been brought forth within Bank Indonesia this year is “How to bring the industry to become more collaborative instead of merely competitive, and how to make the industry to start regulating themselves, or in other words, to become self-regulatory”. Examples from various parts of the world have shown that the private sector can and will self regulate if they are given the opportunity and enough push and nudging, and also ample support by the regulators. Of course, last but not least, the self-regulatory industry shall be subjected to strong oversight by the regulators, or otherwise they may abuse their newfound power.
3 may sound like a tall order, because it may not be so easy for the industry to put fines and charges on its own members for not protecting their own customers. This is of course very different from the relationship between regulators and industry which is under the coverage of public law. Nevertheless if we are to grow an industry that is healthy and responsible, it may worth trying new formula. We have to keep in mind though that the regulators still need to have very strong hold on the industry, and not loosening up unless the industry has proven itself.
Again I am very sure that SEACEN Payment System Directors’ Meeting is an excellent forum within which we can sit together and discuss many policy issues. It is a forum where advises from colleagues can be sought after, and perhaps one day it may evolve to become a forum to resolve policy issues of common interests to all participating central banks.
So Ladies and Gentlemen,
As I am nearing to the end of my speech this afternoon, I would like to again welcome you all to this historical city of Yogyakarta. I hope you are all well taken care of, and have the chance to see the beauty of the city and its ancient monuments and also to get good bargains on local arts and crafts. Please do not hesitate to contact any of our staff on the ground for any assistance that you may need.
I wish you all a fruitful and productive meeting.
Good Afternoon
