The Committee on Payment and Settlement Systems of the Bank for International Settlements (BIS), define payment systems as “a set of instruments, banking procedures, and typically, interbank funds transfer systems that ensure the circulation of money”. In effect, payment systems encompass a set of instruments and means generally acceptable in making payments, the institutional and organizational framework and the operating procedures governing such payments, and the communications network used to initiate and transmit payment information from payer to payee thereby transferring value from one end to another.
The payments system reform effort in Liberia originated from the WAMZ's initiative to achieve regional economic integration of the member states. In so doing, Liberia, through the Central Bank of Liberia (CBL), fast track its assertion to the WAMZ in 2010 in order to take advantage of funding assistance from the African Development Bank (AfDB) through the West African Monetary Institute (WAMI) to upgrade the Payments System infrastructure in select countries in West Africa, in preparation for the lunch of the monetary union. Prior to the start of the regional integration process, the CBL recognized that payments system modernization was a national imperative, critical to economic and financial sector development of the country and therefore took ownership for its implementation. The programs of reform under the modernization agenda include technological upgrade of metropolitan network infrastructure, a state-of-the-art data centers, and software solutions to facilitate online real time payments of all types between participating financial institutions in the country.
In trying to achieve this ambition program, the CBL sought a consensus through collaboration with key stakeholders in order that a holistic view of all aspects of the nation’s payment system needs would be satisfied in an orderly and cost-efficient manner. A collaborative approach was highly desirable because of the complexity of the required changes that will involve inputs relating to service providers, users, technology, legal and regulatory matters, as well as contributions from several professional disciplines. The CBL is of the view that a well-structured collaborative approach involving all stakeholders will create synergy, stimulate learning and provides a basis for optimizing benefits through cooperation and consensus building. The Project Implementation Document (PID), which defines the governance and management structure, was therefore designed to inculcate the active participation of all stakeholder.
The modernization of the Payments and Settlement Systemswas informed by the commitment that the CBL will endeavor to achieve the following objectives:
In order to effectively achieve the policy objectives outlined above, the CBL established a Payments System Unit in 2011 to better coordinate the reform process leading to the implementation of the Payments, Clearing and Settlement needs of the financial system in Liberia.
Function of the Unit
The Unit is currently spearheading the implementation of the Payments System Modernization Project working with all stakeholders. The Unit functions, among others, include: