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January 4th, 2024
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RBA says it’s ready to regulate Facebook’s Libra
ZDNet | Aimee Chanthadavong | March 2, 2020
When, and if, the new payments method is introduced to the Australian market.
The Reserve Bank of Australia (RBA) said it is confident and well-prepared to regulate new payments technologies as they get introduced into the Australia market.
Fronting the Select Committee on Financial Technology and Regulatory Technology on Friday, RBA head of payments policy Tony Richards said payment solutions introduced by the likes of Apple and Google "raise the question of whether or not a domestic regulator has got sufficient influence over what's happening in our market when large global players are involved".
Richards noted how RBA's preparation is currently being tested by the potentially foreseeable introduction of Facebook's Libra project in Australia, saying the central bank will be up to the task if it ever gets to that stage.
See: Bank of Canada Speech: Money and Payments in the Digital Age
"We're getting a test of this currently with the proposal via Facebook for its new Libra coin, but that's a problem I think we can solve," he said.
"The international community of regulatory and central banks are talking to each other to how we would regulate Libra if -- and when -- it's launched.
"Certainly, the rapid pace of innovation is creating challenges for us, but for the most part we can deal with those. But we have to keep up with technology, so we understand the technology that's going behind these business models."
RBA previously said it was unclear whether there would be strong demand domestically for Libra, even if it did meet all regulatory requirements, particularly for domestic payments.
"Australia is already well served by a range of low-cost and efficient real-time payment methods, such as the NPP, that utilise funds held in accounts at prudentially supervised financial institutions," the RBA wrote in its submission to the committee earlier this year.
"Moreover, while Australians may not have been well served by banks providing cross-border payment services in the past, a number of new non-bank digital players have entered the market in recent years offering significantly cheaper and faster money transfer services."
On the point of how the RBA is regulating competition in the cards payment market, Richards said the New Payments Platform (NPP) has the potential to assist.
See: Facebook Weighs Libra Revamp to Address Regulatory Concerns
"One challenge for us is to ensure that it's possible for new forms of payment to emerge that wouldn't necessarily use what we call card rails. For example, could the NPP be used to facilitate retail payments? The NPP is doing some work on QR code that could potentially result in that," he said.
"We're hopeful that there will be competition between the card systems, but also between the card systems and alternative means of making payments. Given the NPP can do real-time payments and they are talking about introducing new forms of pull payments, as opposed to push payments, the NPP could be a way to bring competition into the area that's currently owned by the card systems."
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