Pretoria - A well-functioning national payment system is important to an economy and failure of such a system can have devastating effects on an economy, says Reserve Bank Deputy Governor Daniel Mminele.
Speaking at the launch of the Foundational Payment Systems Course on Monday, the deputy governor said the national payment system was one of the pillars of financial stability while it also played an important and enabling role within the South African economy by linking participants in the domestic financial system with each other.
It also links the domestic systems to the global financial system.
"A properly designed and well-functioning payment system is the lifeblood of any modern economy. Apart from general losses from the economy not operating smoothly, the failure of the payment system can have devastating effects, resulting in systemic risk and contagion effects," he said.
"The failure of a system, or a key participant, can cause other participants to fail and thus transmit shocks within the financial infrastructure, and also threaten the stability of the currency and financial markets in general."
Additionally for central banks, the payment system is a necessary vehicle for the implementation of monetary policy. "It is essential that this element of the transmission channel functions effectively and efficiently while being safe and robust given its systematic relevance," said the deputy governor.
Mminele said the South African national payment system compared "very favourably" with the best of the world.
"Over the years South Africa has also become a respected participant and an important voice in key international payment system fora, while major strides have been made in contributing to the development of our regional payment systems infrastructure," said Mminele.
