RBA not suitable to regulate new payments technologies

The government is being urged to follow in the UK’s footsteps and create a new regulatory body for the payments industry that can regulate new forms of payments being made via blockchain and cryptocurrencies.

A white paper commissioned by lobby group the Australian Taxpayers’ Alliance and conducted by researchers from RMIT University found that existing bodies such as the Reserve Bank were not suited to regulating the rapidly changing digital payments sector, because it wasn’t flexible enough.

Co-author of the report RMIT senior research fellow Christopher Berg told The Australian Financial Review having payments policy and monetary policy in one institution would not be workable with the introduction of cryptocurrencies.

“We think there will be more consumer sovereignty over the way people make payments than there has been in the past,” he said.”

The potential for monetary policy to clash with the needs of the payment system hasn’t been underestimated and we need a separate payments regulator to look at and manage new payments tech.”

UK approach

The UK government passed banking reform legislation in 2013 and established the Payment System Regulator. Prior to this point payments regulation had been governed by the Bank of England and the Financial Services Authority, as well as a self-regulator industry body known as the Payment Council.

The white paper, which will be launched on Tuesday at the Fintech Futures Forum in Melbourne, argues that the creation of an independent payments system regulator would provide more legitimacy than the current regulatory framework.

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Source: RBA not suitable to regulate new payments technologies | afr.com