Bank of Canada: Canada's payments grid needs modernising

Modernising Canada's payments systems will help boost the stability and efficiency of the country's financial system, and reduce systemic and liquidity risk, a senior official at the Bank of Canada said on Thursday.

Deputy Governer Sylvain Leduc announced that although the fast pace of technological change makes updating the high-value payment system challenging, inaction is not an option. Leduc added that a sound system is key to the stability of the financial system as a reliable electrical grid for the economy.

"And a stable financial system is essential for the effective conduct of our inflation-targeting monetary policy," Leduc said in prepared remarks to a Payments Canada conference in Toronto.

"We do not expect the changes to the high-value payment system to alter our ability to control the overnight rate, which should closely track our target policy rate, as is the case today," he added.

The Bank of Canada is responsibile for overseeing the country's main large-value and retail payments systems, which are operated by Payments Canada, a non-profit organisation established by Canada's parliament.

Leduc said the Bank believes the new high-value payment system will be a fully collateralised, defaulter-pays system.

Source: Reuters Canada