The National Payment Systems (NPS) are integral to the efficient functioning of financial markets and the broader economy.
National payment systems facilitate the transfer of funds, enabling payment obligations to be met across various sectors. As a result, they contribute significantly to overall economic performance.
The Central Bank of Lesotho oversees and monitors the NPS to ensure their smooth operation. Two key legislations empower the CBL in this regard:
Payment Systems Act, 2014 (PSA): This legislation grants the CBL the authority to oversee, inspect, and monitor payment and settlement systems within Lesotho. The PSA ensures that these systems adhere to established standards and operate efficiently.
Lesotho Monetary Authority Act of 1978: The CBL, initially established as the Lesotho Monetary Authority, derives its mandate from this Act. It commenced operations on January 2nd, 1980.
Payment Systems Act 2014
Payment Systems Regulations 2017
The Real-Time Gross Settlement (RTGS) system is a critical component of the Lesotho National Payment System (LNPS), facilitating secure and instantaneous fund transfers between financial institutions.
RTGS System Overview:
The RTGS system enables real-time settlement of high-value payments, ensuring that transactions are processed individually and immediately upon receipt.
It eliminates credit risk by settling payments on a gross basis, meaning each transaction is settled independently. The CBL oversees the RTGS system to maintain its integrity and reliability.
Legislative Framework:
The Central Bank of Lesotho (CBL) was initially established as the Lesotho Monetary Authority in 1978, under the Lesotho Monetary Authority Act of 1978. It commenced operations on January 2nd, 19801.
The Central Bank Act of 2000 further empowers the CBL to oversee payment systems, including the RTGS system.
The National Payment Systems (NPS) are integral to the efficient functioning of financial markets and the broader economy. They facilitate secure and timely payment transactions, contributing significantly to overall economic performance. However, due to their central role, payment systems may also involve significant exposures and risks for participants, making oversight crucial.
Legal Foundation:
The oversight of the NPS derives from the Central Bank of Lesotho Act 2000. This Act mandates the Central Bank of Lesotho (CBL) to promote the efficient operation of the payment system.
The CBL ensures adherence to established rules and standards, fostering stability and reliability.
Objectives of Oversight:
The primary goal is to discharge payment obligations arising in financial markets and the wider economy. Oversight mitigates risks, ensures efficiency, and prevents shocks from transmitting across the financial system.
Scope and Instruments:
Oversight encompasses licensing, designation, continuous activities, periodic assessments, and change-driven initiatives. Instruments include rules, standards, policy development, research, and policy dialogue.