RBNZ Sets Stage for Payments System Overhaul Amid Prudential Levy Debate

RBNZ Assistant Governor Angus McGregor said that the Reserve Bank (RBNZ) will publish an issues paper later this month on proposed changes to New Zealand's payments system. The paper aims to make the case for real-time payments and gather feedback from stakeholders.

McGregor emphasized that NZ's retail payments system is reliable but needs to evolve to meet modern expectations, with faster, more efficient, innovative, and resilient ways for people to make and receive payments.

The RBNZ has been developing a strategy to modernize the retail payments system, and McGregor stressed that this work is not just about payment infrastructure but also thinking ahead to the financial system NZ will need in the years to come. The Reserve Bank will publish its work on the future of banking next month, with similar work to follow on insurance.

In response to a question about the Government's proposed prudential levy, McGregor clarified that it wouldn't change how the RBNZ operates but would shift the cost of regulation from the central bank's self-funded revenue to those parts of industry benefiting from regulation. He noted that this is common practice in other countries and emphasized that the RBNZ remains focused on its mandate.

McGregor acknowledged industry concerns about costs being passed on to customers, but stated that the RBNZ would be surprised if this occurred 'when you look at it across the piece.' The Reserve Bank aims to remain agnostic about how businesses are run, promoting competition and innovation while ensuring financial stability.