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Statement by the Monetary Council on the Report on Payment Systems 2013

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4 June 2013

The Magyar Nemzeti Bank’s Monetary Council has discussed the publication Report on Payment Systems 2013 prepared by Bank staff. In the Council’s view, the Hungarian financial infrastructures overseen demonstrated a high level of operational reliability in 2012, thereby efficiently supporting the smooth execution of payment and clearing transactions, which is of key importance for financial stability. The oversight assessments carried out in 2012 also showed that the three overseen systems broadly met relevant international principles. Meanwhile, ICS intraday clearing was launched smoothly, bringing about numerous positive changes for credit institutions’ clients.

The Council has established that clearing and settlement risk remained low in the overseen payment systems throughout the year. Following the launch of intraday clearing, system participants adapted to the changes in their intraday liquidity and transaction management, while this was achieved through a gradual learning process. In line with the oversight expectations and the EU Regulation that entered into force in the meantime, the reorganisation of the securities clearing and settlement infrastructure is under way. Accordingly, by the end of 2013 KELER CCP, which acts as the central counterparty in Hungary, will be recapitalised and the guarantee provided by KELER to KELER CCP is also planned to be terminated. After the reorganisation the structure of the KELER Group will become more transparent in terms of risk management and it will be fully compliant with the new legal requirements.

The Council agrees that the measures taken to promote the growth of cashless payments are likely to lead to a significant improvement in the efficiency of domestic payments. However, in relation to certain social groups it is necessary to act carefully, taking into account their special circumstances. The re-channelling of payments to electronic methods is conducive to combating the shadow economy and to enhancing economic growth. Furthermore, a less cash intensive economy may reduce financial exclusion and it may promote the development of financial literacy. Consequently, measures should be taken to increase the coverage of the electronic payment infrastructure. In this context, the county-level programme for the expansion of the payment card acceptance network is an important milestone. However, the widespread use of payment cards also requires the involvement of the government and the regulation of interchange fees. The Council considers it important that, based on the structure of the financial transaction tax introduced since the publication of the previous Report, the use of electronic payment methods is charged less. The relative difference between the tax rates imposed on cash withdrawals and on electronic payment methods should be maintained or could even be increased further.

The Council considers the measures to reduce the use of cash to be essential and supports them in order to combat the shadow economy.

In the Council’s view, the regulation on negotiable vouchers, also known as ‘local monies’, expected to be adopted in the near future, will adequately address the risks previously identified by the Bank. The new regulation proposed by the MNB will create a transparent, predictable and secure framework for the operation of the market of negotiable vouchers, contributing to the maintenance of confidence in the operating voucher systems.

Magyar Nemzeti Bank

Monetary Council