Improving cross-border electronic transfers
BANK Negara, via its subsidiary Malaysian Electronic Clearing Corporation Sdn Bhd (My clear), has continued its initiatives to improve and enhance the capability of the Real-time Electronic Transfer of Funds and securities System (Rentas) in supporting cross-border payments and settlements.
In March 2012, the onshore multicurrency funds and securities settlement facility was launched for renminbi (RMB) settlements. The RMB settlement facility in Rentas will enhance the efficiency of RMB trade settlements for Malaysian corporates by reducing costs and ensuring finality of settlements.
On June 27 2011, Euroclear, an International Central Securities Depository, became the first foreign entity to be admitted as a member of Rentas. With this, international investors can now seamlessly access the securities and sukuk issued and deposited in Rentas via Euroclear and its participants.
Bank Negara worked closely with central banks and central securities depositories in the region to implement the key development initiatives that has supported the successful implementation of the pilot platform in March 2012.
Towards realising the Asean Economic community vision by 2015, broad work plans, guided by key milestones for the Asean Financial Integration Framework have been formulated and endorsed by the Asean central bank governors.
As a member of the committee, the bank led the study on cross-border trade settlement and contributed inputs to studies in other focus areas covering retail purchases, remittance, standardisation and capital market transactions.
One of the key priorities is to enhance the efficiency and affordability of cross-border payments and settlements in Asean, supported by the wider use of international standards for payments and a greater convergence in legal frameworks.
In the near term, the committee will focus on conducting a feasibility study on potential payment system linkages, such as expanding the regional retail payment network to achieve greater cross-border payment efficiency, capacity building and joint research on specific issues.
To effectively carry out its mandated role of driving the e-payment agenda, My clear acquired IBG, FPX, e-debit, the Direct Debit system and the My mobile platform from MEPS in September 2011.
The acquisition of these facilities by My clear aims to rationalise overlapping e-payment infrastructures to reduce the cost of long-term investments, achieve higher levels of efficiency in e-payment services, and introduce a pricing structure that would encourage higher consumer adoption of e-payment services.
With the acquisition, the bank will be better positioned to drive cost reductions and efficiency in the provision of e-payment services.
Given the importance of e-payments in enhancing economic efficiency, the bank will continue to focus on positioning e-payments as the preferred medium for economic transactions in Malaysia, and on elevating the country’s migration to e-payments to the next level.
This is outlined in five recommendations that encompass 19 key initiatives in the Financial Sector Blueprint 2011-2020. The success of these initiatives will be measured by four key performance indicators, and will bring Malaysia closer to the level of e-payment adoption that has been achieved by others that have successfully migrated to e-payments.