1. Economic impact of regional and cross regional integration of payment infrastructures
D Kumaratunge
Director- Payments and Settlements
Central Bank of Sri Lanka

2. Integration of Payment Systems
Integration of Payment Systems means interlinking individual payment systems of multiple countries.
In the present, many countries in the world have implemented electronic payment systems which has eased the possibility of integration of payment systems of different countries.
Developments in the Information and Communication Technology have also made integration of payment systems of different countries possible.

3. Objectives of Payments systems integration
Relatively lower costs and cross border payments can be made faster than correspondent banks provide
Regional economic and financial integration and development can be enhanced through easier fund movement within the country.
Coordination of monetary policies between economies in the region
Possibility of having a common currency within the region

4. What drives regional payment systems integration?
Increase in intra-regional trade, labor & capital mobility
Increased harmony between financial institutions in the region
Development in the internet based retail trade
Increased tourist movement within the region
Less reliance on correspondent banks

5. Bottlenecks to Develop a Common Regional Payment System
Cross-border connectivity (for payment instructions) should be established to connect to a common regional payment system
The cost to connect the entire region and upgrade infrastructure will be high
The risk associated with the exposure of the national payment system of one country to the payment systems in other countries should be evaluated to provide a safer environment for the participants of the national payment system to interact with their counterparts in other countries of the region
Foreign Exchange laws of the countries have to be amended to provide smooth transactions between countries in the region
Data security standards are required for all participating countries in the regional payment system
The level of available technology and infrastructure related to the payment system in each country in the region should be of the same level

6. Economic Impacts of having a regional payment system
This could be taken as the first step for regional monetary corporation and integration and to establish a common regional currency
There will be a free flow of funds in and out of a participating country
With less friction the cost of cross border transactions would be lowered
Consumers and manufacturers will have access to markets of other countries as well

7. Economic Impacts of having a regional payment system
New technologies related to the payments and settlements field shall rapidly expand within the entire region providing better efficiency to the economy
More liquidity will be available in the region
An alternative can be provided to the use of unregulated cryptocurrencies for cross border transactions

8. Economic Impacts of having a regional payment system
Countries having continuous net outflows will have their currencies depreciated
Consumers of countries with higher inflation rates and higher price levels will tend to purchase goods from countries with lower prices.
There will be higher cross border competition between manufacturers and financial institutions in the long-run
Due to high competition the revenues of these manufacturers and financial institutions might decrease due to lower margins
Macroeconomic policy decisions will have to be taken after considering the economic impacts to the entire region

9. Thank You