RBA sets out plan to make payments system ‘anti-fragile’

It has also warned that delays in encryption and contingency plans risk fraud and disruption.

The Reserve Bank of Australia (RBA) has outlined a series of measures aimed at strengthening the nation’s payments system.

“It is in this sense that we are striving to give our system an ‘anti-fragile’ character,” Assistant Governor Brad Jones said.

One priority is a rebooted Industry Resilience Initiative, where the RBA and APRA are working with the major banks, Australian Payments Plus, and AusPayNet to develop contingency plans to ensure essential payment services can continue during major disruptions.

The bank is also shaping the design of future account-to-account (A2A) payment systems. “Following our risk assessment in March, we recently set out a public interest framework to guide industry in their strategic planning for the future A2A system,” Jones said.

The RBA is urging faster adoption of the Advanced Encryption Standard (AES), warning that advances in quantum computing will pose a risk to the secure exchange of payment details.

To encourage more competition in financial market infrastructure (FMI), the Payments System Board has recently raised the threshold beyond which firms are required to comply with the Financial Stability Standards for Securities Settlement Facilities.

This increases the threshold from $200m to $40b, lowering barriers for smaller firms to emerge to stimulate competition and diversify risk across the FMI landscape.

At the same time, the RBA is working on two projects: Project Acacia, which examines the role of digital money and central bank digital currency in wholesale markets, and Project Mandala, which aims to develop protocols to automate regulatory compliance processes in cross-border payments using new types of ledger arrangements.

“Finally, we are assisting the government to advance and implement its payments regulatory reform agenda—including reforms to the Payment Systems (Regulation) Act and licensing arrangements,” Jones said.

The reforms are intended to clarify regulations and enhance regulators’ ability to foster innovation, competition, and resilience in the system.