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

SADC Modernisation so far IMPLEMENTATION LAUNCH SENSITISATION INFO & STOCKTAKING VISION & STRATEGY CONCEPTUAL DESIGN BUS. PROC SPECS TECHNICAL SPECS DEVELOP/ PROCURE 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) A single currency (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 Model 3 Banks may settle through their head office to centralise their Treasury functions pool liquidity

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

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

Model 3 Bank W/hoek FNB ABSA CMA Clear NFNB South Africa Namibia CMA Settlement FNB ABSA Bank W/hoek NFNB 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 SWIFT FIN ZDS Copy Service MT/103MT202 MT103./MT202 SAMOS Participant Bank SAMOS Participant Bank MT096 MT097 SAMOS RTL CPL and CBPL Loans Reserve Management Settlement Management Instruction RESS Account. Dr SAMOS Bank A Cr SAMOS Bank B

CMA Domestic Bank to CMA Domestic Bank Payments SWIFT FIN Copy Service MT/103MT202 MT103./MT202 Domestic Participant Bank Domestic Participant Bank MT096 MT097 Domestic RTGS RTL CPL and CBPL Loans Reserve Management Settlement Management Instruction RESS Account. Dr Domestic Bank A Cr Domestic Bank B

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

SAMOS Participant Bank to CMA Participant Bank Cross Border Payments Bypass SAMOS system (Normal settlement between CMA Banks) SWIFT FIN RESS Copy Service MT103./MT202 MT103./MT202 1 6 2 SAMOS Participant Banks CMA Participant Banks 5 3 MT096 MT097 4 SIRESS CPL and CBPL Settlement Management Instruction Admin Instructions SAMOS RTL CPL and CBPL Loans Reserve Management Settlement Management Instruction RESS Account. Dr SAMOS Bank Cr CMA Bank

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