The Central Bank of Nigeria (CBN) will cease to be the Lender of Last Resort for the Real-Time Gross Settlement (RTGS) payment system in the country by December 2016.
The CBN, Governor, Mallam Sanusi Lamido Sanusi disclosed this at the opening of the International Conference on Payments System and launch of the revised Nigerian Payments System Vision2020 Strategy document, in Abuja, yesterday.
According to him, the decision was one of the key recommendations of the revised Nigerian payments Systems Vision 2020.
Sanusi said: “It is pertinent to note that the key recommendations resulted from a much higher target for compliance than was possible in 2007, due to the significant progress already achieved.
“Specifically the Central Bank of Nigeria shall: ensure that henceforth, no national payments system shall invoke the principle of unwind. CBN will formally inform the industry that unwinds must not be invoked in any national payment system. Each payment scheme must define and formally document the exact point at which payments are deemed to be ‘final and irrevocable’; remove its implicit role of ‘Lender of Last Resort’ for the RTGS payment system by December 2016 and Deferred Net Settlement systems by December 2019.”
He added that it would also stop the Deferred Net Settlement systems by December 2019. An outline of deployment plan, according to Mal. Sanusi, would be published by the apex bank to show steps towards the objective.
Prior to 2006, large value payments in Nigeria were settled through a deferred net settlement system and the CBN had to commence operations of RTGS System to increase the efficiency of time-critical payments, given the defects of the net settlement system and in view of the sensitive nature of wholesale payments, which were settled through a deferred net settlement system.
The system was introduced to reduce liquidity risk, eliminate credit risk and increase the efficiency of treasury operations of banks and Discount Houses.
CBN’s decision to stop unwinds being invoked means that after an electronic transaction has reached a certain stage it can no longer be reversed.