Central bankers of in South Asian countries have reached an agreement on the need for the enforcement of payment and settlement system (PSS) in the SAARC region. The SAARC region is an economic and geopolitical cooperation among Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.
A mutual consensus for the need to bring about reforms in domestic, as well as cross-border payment and settlement systems through close coordination and cooperation was reached.
Nepal Rastra Bank (NRB) Governor Dr. Yuba Raj Khatiwada attributed cross-border payments’ inefficiency to the lack of a single ubiquitous global payment system. “This is because most payment systems are based on local laws and practices within existing domestic banking and financial structures. Lack of common global standard and variations between systems have reduced the ability of both banks and corporate treasury/enterprise systems to seamlessly pass data between each other,” said Dr. Khatiwada.
A greater coordination of payment systems among SAARC members is necessary to streamline the long journey of fuller economic integration as expressed in the aim for attaining South Asian Economic Union.
HR Khanna, deputy governor of Reserve Bank of India, said that the robust payment and settlement system would enhance the accessibility, assurance, efficiency and affordability of the banking system. “Most of the South Asian countries are cash-based economies. Technological advancement of the payment and settlement system helps on moving toward cash-less society,” he added.
The new system would help SAARC member countries better understand each other and bring their payment systems, electronic mechanisms, instruments and settlement mechanisms on the international level.
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