MEDIA RELEASE No: 1995-10 Date: 6 July 1995 Embargo: For Immediate Release

REFORM OF INTERBANK PAYMENTS

On 5 April, the Reserve Bank outlined a proposal for moving towards a real time gross settlement (RTGS) system for high value payments which would be based on the existing Reserve Bank Information and Transfer System (RITS). This initiative was taken with a view to minimising risks in interbank payments and keeping Australia up with international best practice in arrangements for effecting payments in the economy.

The Bank has held extensive discussions with individual banks and the Australian Payments Clearing Association (APCA) on its proposal and has responded to a number of the policy and technical issues which have been raised in comments and questions from the industry.

In the light of these discussions and its own further investigations, the Bank has concluded that the installation of an RTGS based system on RITS is appropriate, cost effective and technically feasible. The Bank has, therefore, decided to press ahead with this project, with the aim of having a system operational during 1997.

The Bank acknowledges that some important implementation issues (as well as points of detail) have yet to be resolved. These include, in particular, issues relating to the connections among, and ownership of, various components of the high value payment system, which will require further discussion with the industry.