12 July 2012
The Magyar Nemzeti Bank’s Monetary Council has reviewed the July 2012 issue of the Report on Payment Systems prepared by Bank staff. The Council considers it important that a new element has been added to the Bank’s major publications. The Report, to be published yearly from now on, will contain detailed information on one of the Bank’s core activities: promoting the smooth execution of payments and the reliable and efficient operation of the domestic clearing and securities settlement systems.
In the Council’s view, the measures taken to promote the growth of cashless payments are likely to lead to a significant improvement in the efficiency of domestic payments. Increasing the use of various cashless payment methods could result in saving considerable resources. However, improving the access to basic payment services is a precondition for the wider use of cashless payment instruments. This process could be promoted, among others, by creating a low-cost basic payment account facility and by launching a programme for the installation of POS terminals. Changing payment habits requires that i) card acceptance is made compulsory, initially focusing on certain sectors and later extending this obligation step by step ii) the use of cash is restricted gradually, iii) payment methods are priced transparently, separately from basic services, and iv) payment card interchange fees are reduced. The introduction of the financial transaction tax may weaken the initiatives to build a less cash intensive economy. Consequently, it may result in an increased use of cash and an expansion of the shadow economy. However, due to the fact that the financial transaction tax is introduced with a relatively low cap, it is not expected to cause a significant distortion to the paying behaviour of economic agents.
The Council believes that the Bank’s regulatory and supervisory activities are vitally important for the predictable and smooth functioning of domestic payments. From 1 July 2012, the MNB required the introduction of intraday clearing in its Decree, prompting the domestic financial sector to take a major step forward in the development of retail payment services.
In the Council’s opinion, the regulatory measures to reduce the use of cash and, consequently, to combat the shadow economy are of great importance and have the support of the Council.
In view of the size of the domestic voucher market as well as the risks inherent in its business model, the Council agrees that it is necessary to introduce regulatory requirements for this market. It is a basic principle that such a large market must operate in a transparent, safe and reliable way.
Reviewing the chapters of the Report on the Bank’s oversight activities, the Council has found that in 2011 the risk of service continuity in the three overseen systems (the Interbank Clearing System, VIBER and the securities clearing and settlement system) was low and there was a reduction in system interdependency risk relative to previous years. Clearing and settlement risk was low both in the Interbank Clearing System and VIBER. However, in the context of the introduction of intraday clearing, the Council considers it important that the Bank continuously monitors the parallel operation of the two systems, and, if necessary, contributes to the solution of clearing and settlement difficulties potentially caused by coordination problems. In the guaranteed spot market, the frequency and value of settlement fails increased in 2011 relative to the previous year, and clearing and settlement risk in the energy market increased temporarily. The recent extension of the settlement deadline in the spot market may reduce the probability of settlement fails.
Monetary Council
Magyar Nemzeti Bank