Insight,

Digital Economy,

Modernising Australia’s financial system - Developing a Strategic Plan for the Payments System

13 January 2023

Authored by:

Max Allan ,

and Jazz Osvald

The Treasurer of Australia and Assistant Treasurer have announced a broad agenda to modernise Australia’s financial system in 2023 and the Australian Treasury has published an important consultation on the Strategic Plan for the Payment System. This includes updating and strengthening the payments system, strengthening our financial market infrastructure, establishing a framework for buy-now-pay-later and for the licensing and regulation of crypto service providers.

In this alert, we take a close look at this agenda and provide:

An overview of the key aspects of Treasury’s consultation.
A detailed synopsis of the proposed reform areas for Australia’s payments system.
A summary of additional future reform priorities for Australia’s financial system more broadly.

Consultation responses are due on 6 February 2023. Please let us know if we can assist you to respond and to plan for the changes ahead.

Overview

As part of the Government’s payments system reform agenda, Treasury has published the Strategic Plan for the Payments System Consultation Paper (Consultation Paper). The proposed strategic plan (Strategic Plan) is intended to be a comprehensive, long-term strategy that sets out the Government’s policy objectives and priorities for the payments system, that will also help coordinate decision-making between government and other stakeholders. That Strategic Plan should:

provide vision and leadership to shape the future direction of the payments system;
outline key policy priorities for the payments system, while being adaptable to future challenges and opportunities; and
provide a roadmap for initiatives to improve outcomes in the payments system and set out the roles and responsibilities of the Government, industry, and regulators in delivering on the initiatives.

The Consultation Paper contemplates that the Strategic Plan may cover, or contemplate interactions with, a broad range of important actions such as:

disrupting scams and coordinating scam responses;
highlighting cyber security and resilience;
updating the Payment Systems (Regulation) Act 1998 (Cth) (PSRA);
implementing a new tiered licensing framework for payment service providers;
developing common access requirements for payment systems;
reducing small business transaction costs, particularly through least cost routing, or a similar solution;
supporting the strengthening and deepening of the functionalities of the Consumer Data Right (CDR) (including action initiation);
exploring the policy rationale for a central bank digital currency (CBDC) in Australia;
considering developments in relation to crypto-assets and stablecoins;
modernising aspects of the existing payments infrastructure;
maintaining access to cash for those that rely on it; and
international interoperability and cross-border initiatives.

The Government is seeking input into the proposed Strategic Plan by 6 February 2023. This presents an opportunity for the industry to provide important feedback to determine the key priorities, initiatives and actions for the payments system and to assist in the development of a Strategic Plan that can assist in coordinating action across the public and private sector.

The Government has also indicated it will consult on additional payment system priorities early this year (including buy-now-pay-later (BNPL) arrangements and financial market infrastructure improvements), release its “token mapping” consultation paper early this year, and, following the release of that “token mapping” consultation paper, consult on a custody and licensing framework this year before introducing legislation.

A summary of the payments reform agenda and areas of consultation are set out in sections 1 to 3. Section 4 then outlines further areas of financial sector modernisation.

Why does it matter?

2023 promises a packed agenda of reforms, developments and updated principles for the regulatory architecture of Australian financial system. These will be fundamental to the business structures and operations of many Australian market participants and critical to the safe and efficient operation of the Australian financial system and broader economy. Further, many of the key priorities and supporting initiatives will involve significant amounts of work for, and require a multidisciplinary approach by, market participants. Accordingly, it is important to engage early with these proposed reforms, developments and principles to ensure you and your business are best placed to make the most of the opportunities they present.

1. Payments system reform agenda – the backdrop

In June 2021, the Government published its review into the governance and regulation of the Australian payments system, Payments system review - From system to ecosystem (Payments System Review). Chaired by Dr Scott Farrell, the Payments System Review examined whether the regulatory architecture of the Australian payments system remains fit-for-purpose and responsive to advances in payments technology and changes in consumer demand, which included investigating whether the regulatory framework adequately accommodates new and innovative systems and the effectiveness of the current structure in implementing government policy. The Payments System Review provided 15 key recommendations.

In December 2021, the Government published its response, Transforming Australia’s Payments System which agreed with all but one of the recommendations of the Payment System Review and set out that:

“The government should develop a strategic plan for the payments ecosystem in collaboration with regulators, industry, and representatives of consumers and businesses.

The plan should provide certainty on policy priorities and strategic directions for the payments ecosystem, while being adaptable to future challenges and opportunities.”

The release of the Consultation Paper by the Government has now set the implementation of this recommendation in motion.

2. Strategic plan for the payments system

The Consultation Paper notes that the first step of the payments system reform agenda is to develop a Strategic Plan for the future of Australia’s payments system, and sets out the Government’s proposed approach to this Strategic Plan in two parts.

Part 1 outlines the proposed contents of the Strategic Plan, outlining the key principles, priorities and initiatives, and the roadmap for implementation.

Part 2 sets out the Government’s proposed process to review the Strategic Plan. This includes engagement with, and coordination of action between, the private and public sectors and stakeholder meetings regarding the progress of key items and future key areas of focus. Consultation will involve roundtables with regulators, industry groups, consumer and business representatives over 9 months following publication, and more detailed bilateral discussions over 10 months. Following this, the Government will undertake a 12-month review of the Strategic Plan to ensure the priorities and initiatives remain relevant as circumstances change and to provide report on progress.

Key principles

The Strategic Plan proposes key priorities that articulate the objectives for the payments system, and will guide the Government’s decision-making and policy work. The key priorities are intended to be comprehensive, adaptable to opportunities and able to protect the interests of Australia.

The key priorities and proposed actions are intended to be underpinned by the following key principles:

Efficiency: An efficient payments system enables fast transfer of funds processed in a seamless way with minimal friction, and promotes competition and interoperability.
Innovation: An innovative payments system is agile, forward-looking and adds value to the user’s payment experience. It is proactive and can quickly reposition itself to realise new opportunities and respond to challenges.
Accessibility: An accessible payments system is simple and inclusive. It does not impose unnecessary restrictions on access to payment networks or service providers. It is also important that payment services are low-cost and provide choice for consumers and businesses.
Trustworthiness: A trustworthy payments system is safe, secure, reliable and resilient, which provides users with robust protections against fraudulent transactions and scams, and ensures transactions are processed. More broadly, a trustworthy payments system supports system stability and operational resilience.

Key priorities, initiatives and proposed actions

To give effect to the key principles, the Consultation Paper sets out:

the key priorities, which articulate the current pressing needs of the payments system and therefore support and promote the key principles in a relevant way. These are intended to be adjusted over time to reflect progress or changing circumstances. They will be developed in collaboration with regulators, industry, and consumer and business advocacy groups;
a number of key initiatives to support the delivery of each priority; and
proposed corresponding actions for the Strategic Plan.

The table below is a summary of the tables presented in the Consultation Paper covering these areas.

KEY PRIORTY 1: PROMOTE A SAFE AND RESILIENT PAYMENTS SYSTEM

Key initiative	Proposed action	Example uses 2
Reduce the prevalence of scams and fraud Payment scams and fraud continue to present as an important issue in the retail payments system. Industry remains focused on addressing payments fraud, with new initiatives to share information with law enforcement, regulators, and industry peers such as initiatives to detect and prevent scams and providing resources to protect vulnerable consumers. New technologies such as PayID on the New Payments Platform (NPP) are also providing greater security. Initiatives such as AusPayNet’s Card-Not-Present Fraud Mitigation Framework are also continuing to support fraud detection and mitigation. The ePayments Code provides protections against certain types of financial losses, however, it is currently voluntary and not all payment providers have subscribed to the Code. The Payments System Review recommended the ePayments Code be made mandatory for holders of a payments licence. The Government has committed to a new long-term, coordinated, whole-of-government approach to reduce scam losses for Australians. This approach brings together resources from the private sector and, governments to enable better collaboration, information sharing and coordinated disruption of scams. In the October 2022-23 Budget, the Government provided an initial investment of $12.6 million over four years from 2022-23 to combat scams. This funding has enabled the Australian Competition and Consumer Commission to undertake initial steps for the phased establishment of a National Anti-Scam Centre.	The Strategic Plan could: continue to support and monitor government and industry initiatives that share intelligence to disrupt scams and coordinate scam responses, recognising the private sector is the first line of defence against scams; and provide a roadmap for mandating the ePayments Code as part of the new payments licensing framework, including proposed timing for consultation.
Strengthen defences against cyber-attacks Along with other critical infrastructure systems, the payments system is essential for the Australian economy to function effectively. As the threats and risks to Australia’s critical infrastructure evolve in an increasingly digital world, so too must the approach to ensuring the ongoing security and resilience of these assets and the essential services they deliver. The Government has passed amendments to the Security of Critical Infrastructure Act 2018 to enhance the regulatory framework for operators of critical infrastructure assets. Operators of certain critical payments system assets will need to comply with certain risk management and other obligations to safeguard the payment systems upon which the Australian economy relies, including from cyber threats. Following a 2022 cyber security incident involving an Australian telecommunications company, the Government amended the Telecommunications Regulations 2021 to better protect Australians. The updates allow telecommunication companies to temporarily share limited identifier information (such as drivers licence, Medicare and passport numbers of affected customers) with regulated financial service entities and government agencies to detect and mitigate the risks of cyber security incidents, frauds, scams and other malicious cyber activities. Supervision of systemically important payment systems The RBA, in its role as supervisor of systemically important payment systems, promotes the safety and resilience of financial market infrastructures and payment systems. As part of this work, the intention is that the RBA will also fulfil its role as regulator of payments systems that are critical infrastructure assets under the risk management program obligation of the Security of Critical Infrastructure Act 2018. In 2023, the RBA is planning to broaden its work on safety and resilience to include additional payment systems, including the NPP.	The Strategic Plan could highlight security and resilience as objectives for payments policy, and support Government’s agenda on cyber security including through implementing the requirements under the Security of Critical Infrastructure Act 2018 (Cth).

KEY PRIORITY 2: ENSURING THE REGULATORY FRAMEWORK IS FIT FOR PURPOSE AND PROMOTES COMPETITION

Key initiative	Proposed action	Example uses 2
Implement changes to the PSRA including a Ministerial designation power The Payments System Review recommended the PSRA be modernised to ensure that the regulatory framework governing the payments system and its participants is fit-for-purpose and the RBA is able to respond to developments that are in the public interest. These include updates to ensure appropriate coverage of all entities that play a material role in Australia’s payments system. A ministerial designation power was also recommended by the Payments System Review to empower the Treasurer to intervene where it is in the national interest to do so.	The Strategic Plan could provide a roadmap implementing reforms to the PSRA, including proposed timing for consultation and legislation.
Introduce a tiered payments licensing regime for payment service providers The Payments System Review recommended establishing a new functions-based licensing framework for payment service providers. The current regulatory framework is based on historical concepts of payment products and payment services. A functional approach is required to describe the role that a service plays in the payments system, allowing regulation to be agnostic to the technology, business model or the store of value utilised.	The Strategic Plan could provide a roadmap for the implementation of the new licensing framework, including proposed timing for consultation and legislation.
Enable greater collaboration between payments system regulators As payments system participants extend beyond the traditional banks, it is increasingly necessary for there to be effective collaboration between payment regulators. In line with the Payments System Review recommendations, an inter-agency payments forum has been established, designed to strengthen collaborations and information-sharing among payment regulators, improve consistency and certainty in regulatory outcomes, and better align with the strategic direction.	The Strategic Plan could continue to support and endorse the inter-agency payments forum in its efforts to strengthen collaboration and communication.
Promote competition by facilitating proportionate, objective and transparent access to payment systems Australia’s payment systems operators have in many cases required payment participants seeking access to hold an Authorised Deposit-taking Institution licence. With the fragmentation of the payments value chain and the disintermediation of payment services, the Government supports opening access to Australia’s payment systems to payment service providers that do not hold an ADI licence, provided these participants are subject to requirements that can mitigate operational, financial and systemic risks. The RBA is developing common access requirements in consultation with the operators of payment systems which will form part of the payments licence to facilitate access for licensees to those systems. Facilitating greater access to payment systems through the provision of clear, objective, proportionate and transparent access requirements will support greater competition between payment service providers and encourage development of more payment innovations for consumers.	The Strategic Plan could support the Reserve Bank of Australia’s (RBA) work with payment system operators to develop common access requirements for payment systems, with a view to implementation through the new licensing framework.
Reduce small business transaction costs by supporting the availability of least-cost routing Stakeholders have raised concerns that merchant costs are too high due to ‘tap and go’ payments not being automatically routed down the cheapest payment rails. Reviews from the Productivity Commission and Parliamentary Joint Committee on Corporations and Financial Services have found that Government or RBA intervention may be necessary to address this issue. Consistent with the findings from these Reviews, the Government is committed to reducing small business transaction costs by implementing least-cost routing (LCR) or a similar solution. The Government recognises that LCR is currently broadly available for in-person debit card transactions but has only recently become available for some online debit transactions, and is not yet available for mobile wallet debit transactions. The Government supports the targeted actions being taken by the RBA that align with the Government’s commitment – namely the setting of industry expectations to ensure that LCR is available and enabled for small business, and engagement with industry on their compliance with these expectations. The Government expects LCR to be widely available and enabled by mid-2023 for in person ‘tap and go’ debit card and online debit card payments and supports the expectation set by the RBA that LCR for mobile wallet debit transactions be made available by the end of 2024. Further, new payment developments such as the NPP have scope to reduce small business transaction costs.	The Strategic Plan could: support the RBA’s approach in improving the availability and enablement of least cost routing (LCR) and note that stronger Government intervention remains possible if the RBA’s expectations are not met; note that the PSRA’s expanded regulatory perimeter could enable the RBA to mandate LCR for digital wallets; and note a range of policy measures to promote competition, innovation, and transparency.

KEY PRIORITY 3: ALIGNMENT WITH THE BROADER DIGITAL ECONOMY TRANSFORMATION

Key initiative	Proposed action	Example uses 2
Ensure the payments system is aligned with developments in the broader data ecosystem including the CDR The CDR gives consumers control over their data, making it easier for them to access their data and use this to make informed decisions. For example, Open Banking is helping Australians make better use of their money by making it safe to use transaction data to simplify complex financial decisions and take advantage of data-enabled innovations. The Inquiry into the Future Directions for the Consumer Data Right (the Inquiry) recommended strengthening and deepening the CDR’s functionality and use through the implementation of third-party action initiation. This would enable consumers to instruct a firm to initiate actions on their behalf and with their consent. Introducing action initiation in the CDR is part of the Government’s commitment to expand the CDR across the economy and grow the opportunities for consumers to make use of their own data for their benefit. The Inquiry proposed payments to be the first action to be introduced in the CDR. This would empower consumers and businesses to both control their data and authorise, manage and facilitate payments securely via the CDR. The independent CDR Statutory Review also recognised the importance of action and payment initiation to the CDR for its potential to deliver efficiency and convenience for consumers. CDR payment initiation would create a new channel for a consumer to instruct their financial provider (via a third party) to make a payment, with the making of the payment and transfer of funds relying on existing payment systems and remaining outside the scope of CDR. This would enable flexibility to utilise and build on existing developments in the payments landscape, such as PayTo. To enable this to work effectively, the interaction between the CDR framework and payment systems should be considered to optimise efficiency and interoperability. Key areas of interaction include the participants themselves and the obligations they face, such as CDR accreditation and payment licence requirements, and how consumers engage with each system. The Government has introduced proposed changes to primary legislation to enable action initiation in the CDR. If passed, the proposed legislation will provide a pathway to bring individual action types, such as payments, into the CDR. Any subsequent introduction of payment initiation will be subject to further consideration and consultation.	The Strategic Plan could: discuss the interlinkages between the CDR and the payments system, such as payment initiation; note the importance of aligning with work underway to expand the CDR to enable action initiation; and highlight the importance for ongoing alignment between an evolving CDR framework and both existing and emerging payment systems and regulatory requirements.
Explore the policy rationale for a CBDC in Australia, including investigating the economic, legal, regulatory and technological considerations associated with an Australian CBDC As new technologies and the broader digitalisation of the economy drive innovation in payments, central banks around the world have begun investigating the potential implications of issuing a CBDC. For the RBA, CBDC research constitutes a strategic priority in its work to understand the implications of digital innovation for competition, efficiency, and stability in the Australian payments system. The RBA has concluded two research projects, Project Atom and Project Dunbar, that involved developing proofs-of-concept for the use of wholesale CBDC to settle transactions. Currently, the RBA has partnered with the Digital Finance Cooperative Research Centre (DFCRC) on a limited-scale CBDC pilot that will explore potential use cases and economic benefits of an Australian CBDC, whether retail or wholesale. The Government supports work to explore the policy rationale for a CBDC in Australia and has tasked the Treasury to work with the RBA on this policy question. The findings of the pilot, which is scheduled to conclude around mid-2023, are expected to provide a valuable contribution to this joint work.	The Strategic Plan could provide an update on proposed work to explore the public policy case for issuing a retail or wholesale CBDC in Australia.

KEY PRIORITY 4: MODERNISE PAYMENTS SYSTEM INFRASTRUCTURE

Key initiative	Proposed action	Example uses 2
Support the transition to more modern payments infrastructure A key part of modernising our payments infrastructure is considering how we collectively (between industry and Government) address less functional payments infrastructure in the payments system. Two key legacy systems in Australia are the cheques system and the Bulk Electronic Clearing System (BECS). The use of cheques has declined significantly in the past few decades. Less than 1.2 cheque transaction per person were made in 2021/22. Further, cheques accounted for 0.2 per cent of the total number of non-cash retail payments and less than 2 per cent of the total value of noncash retail payments. [1] This decline is expected to continue with the ongoing transition to more accessible, low cost, secure and more efficient payment methods. BECS was developed decades ago, and its capability reflects the limitations of the time in which it was created. Over time, the payments system has expanded, and the industry has invested in new infrastructure that offer faster and more secure payment options. Industry has noted that continued usage and upkeep of these systems can be costly and diverts resources from investment in newer, more efficient, and innovative technologies. Payments System Board Annual Report 2022 at page 16.	Consistent with the recommendation from the Payments System Review, the Strategic Plan could be used to coordinate action between the public and the private sector participants (including consumer and business advocacy groups) to support a smooth the transition to more modern and efficient payment alternatives. The Strategic Plan could: support industry-led efforts to transition away from legacy systems where appropriate; raise public awareness and promote the use of safer and more efficient alternatives, particularly with consumers and businesses that rely on legacy payment systems to ensure a smooth transition; provide details about steps the Government (in collaboration with its agencies and state counterparts) can take, as a large user of these payment systems, to drive migration of payments it sends and receives from legacy systems to alternatives; and monitor the ongoing use of payment systems, assess risks and report on progress in subsequent plans. Payments System Board Annual Report 2022 at page 16.	Payments System Board Annual Report 2022 at page 16.
Maintain adequate access to cash for those that rely on it Cash continues to be an important method of payment that is widely accepted by merchants, used as a store of value, available offline in the event of a crisis such as a bush fire or flood, and which supports financial inclusion. Nonetheless, use of cash as a method of payment has been declining for many years due to changing consumer preferences and advances in technology. This long-run trend has been reinforced by changes in payment behaviour arising from the COVID-19 pandemic. The Government notes the findings of the RBA’s Review of Banknote Distribution Arrangements, namely that the declining volume of banknotes being transported is putting pressure on the wholesale distribution network, and the recommendations from the Regional Banking Taskforce, which has highlighted the importance of regional cash access. The Government also notes that overseas jurisdictions are undertaking work to address similar issues. For example, the United Kingdom announced regulation to ensure wholesale cash infrastructure remains effective and resilient. Payments System Board Annual Report 2022 at page 16.	The Strategic Plan could: articulate principles that will inform the Government’s response to providing consumers with adequate access to cash, which seeks to acknowledge the trade-offs between efficiency and accessibility; and align with work underway to support innovation being undertaken across the ecosystem in payment methods. Payments System Board Annual Report 2022 at page 16.	Payments System Board Annual Report 2022 at page 16.
Promote interoperability with international standards and arrangements for cross-border payments and support international efforts to enhance cross-border payments The Government supports the G20 Cross-Border Payments Roadmap (the G20 Roadmap) and its purpose of addressing the challenges of cost, speed, transparency, and access in regard to cross-border payments. The G20 Roadmap is complex, ambitious and represents a long-term commitment, where the final measures are expected to be implemented in 2027. Therefore, the Government supports the prioritisation of key workstreams. Effective implementation of priority aspects of the G20 Roadmap could assist Australia with replacing existing systems that are expensive, slow, and opaque with more modern infrastructure for facilitating cross-border payments. Further, ensuring that the NPP and other payment systems are interoperable with major payment systems in other countries could yield efficiency gains. Australia supports research in assessing the use cases of CBDCs, including for cross-border payments. Australia is also assisting with the maintenance of strong payment linkages to Pacific nations and initiatives to put downward pressure on costs, which would support financial inclusion. Payments System Board Annual Report 2022 at page 16.	The Strategic Plan could: discuss Government priorities associated with the implementation of the G20 Roadmap; highlight industry efforts to deliver on Australia’s commitment to the G20 to enhance cross-border payments; and support engagement with fellow Pacific nations and foster financial inclusion. Payments System Board Annual Report 2022 at page 16.	Payments System Board Annual Report 2022 at page 16.

Roadmap for the Strategic Plan and additional consultations

The Strategic Plan also includes a draft roadmap for implementation of key priorities and initiatives. This includes key deliverables, the timing of these deliverables and the roles of the Government, industry, and regulators. It also sets out milestones and annual review process, involving mapping against and updating those milestones.

A proposed timeline is set out below.

Attachment C: Draft Roadmap example

The Consultation Paper also sets out further payments consultations to be undertaken in 2023, including (but not limited to):

updating the PSRA to capture the full suite of payment entities and systems, as well as provide the Treasurer with ministerial powers to address payment issues outside the scope of the RBA public interest powers;
implementing a tiered licensing framework for payment service providers;
reducing small business transaction costs, particularly through LCR, or a similar solution;
continuing development of international interoperability through cross-border initiatives; and
considering developments in the broader digital economy that are related to payments, such as digital wallets, BNPL, stablecoins, [2] crypto-assets, CBDCs, the CDR, and connecting with payment-related initiatives underway across the country (eg state-based initiatives).

3. Consultation

Government is seeking feedback on the proposed key principles, key priorities, initiatives and roadmap, including:

views regarding each of the key principles, key priorities, initiatives and roadmap;
whether the key priorities provide enough certainty regarding the Government’s priorities;
any feedback on the proposed approach for any of the initiatives and key milestones;
whether there are any conflicts between milestones and pressure points identified in the roadmap; and
if there are there any other principles, priorities or initiatives that should be included.

The Government is also asking stakeholders for an explanation of their views. This feedback is due on 6 February 2023 and can be sent via email to paymentsconsultation@treasury.gov.au with responses in a Word or PDF format.

4. Future reform priorities to modernise Australia’s financial system

The Treasurer and the Assistant Treasurer have also released a joint media release with sets out the suite of reforms to modernise Australia’s financial system. In addition to the payments system reform described above, the joint media release sets out the Government’s reform agenda with respect to:

BNPL. The Government will establish a regulatory framework for BNPL;
financial markets infrastructure (FMI). The Government has committed to:
1. act on the recommendations by the Council of Financial Regulators to improve Australia’s FMI. Several reviews have identified deficiencies in the current regulatory framework, such as the lack of a crisis resolution regime to enable the RBA to step in and to ensure the continuity of clearing and settlement services in the face of a crisis;
2. provide the RBA with powers to step in and resolve a crisis at a domestic clearing and settlement facility, as well as strengthen and streamline regulator’s licensing, supervisory and enforcement powers in respect of FMI to reduce the likelihood of a crisis occurring;
3. set minimum, enforceable conditions to facilitate a competitive environment for clearing and settlement. This includes introducing legislation to facilitate competitive outcomes in the clearing and settlement of cash equities, should a competitor emerge and in the event of ongoing monopoly provision, in clearing and settlement by providing ASIC and the ACCC with additional powers. The joint media release notes that rule-making powers will allow ASIC, with ministerial approval, to quickly act to make rules to manage matters related to competition, such as pricing, access, governance arrangements and interoperability; and
the crypto sector. The Government has committed to taking action to improve the regulation of crypto service providers, including by:
1. releasing the token mapping consultation paper early this year to inform what digital assets should be regulated by financial services laws, and the development of appropriate custody and licensing settings to safeguard consumers; and
2. following the release of token mapping, consulting on a custody and licensing framework this year before introducing legislation.

Next steps

Responses to the Consultation Paper are due to the Government by 6 February 2023.

More generally, as the Consultation Paper observes, the pace of change across technology, business models, participants, and regulation is accelerating and 2023 promises a packed agenda of reforms, developments, and updated principles for the regulatory architecture of Australian financial system. These will be fundamental to the business structures and operations of many Australian market participants and critical to the safe and efficient operation of the Australian financial system and broader economy. Further, many of the key priorities and supporting initiatives will involve significant amounts of work for, and require a multidisciplinary approach by, market participants.

Accordingly, we recommend:

engaging early with these proposed reforms, developments and principles - not only to understand each of them in isolation, but also to develop a robust understanding of the interactions across all these developments; and
planning ahead to ensure you and your business are best placed to make the most of the opportunities these reforms present.

Please do reach out to us anytime to discuss these announced consultations and developments, and their interrelationship, particularly if you have any questions about how the current requirements apply to you, or want to explore the opportunities that these developments could present for you and your business.

As previous highlighted in the Council of Financial Regulators June 2022 Quarterly Statement and more recently in the RBA’s December bulletin titled “Stablecoins: Market Developments, Risks and Regulation”, the Council of Financial Regulators are currently considering options to incorporate payment stablecoins into the regulatory framework for stored value facilities.