By: Luke Jones, Published on May 26, 2017 07:21 PM, Last Update on May 27, 2017 06:23 AM
A senior official at the Bank of Canada said Thursday that the country’s payment infrastructure is in need of reform if the financial system is to remain stable in the face of new technologies.
Deputy bank governor Sylvain Leduc suggests that financial payment methods must be modernized to keep pace with changing methods. He says innovations like PayPal and Apple Pay have changed the way people pay for goods and services and the financial system in Canada must keep pace.
The financial system will get stability and manage credit risks by staying up to date with payment methods, Leduc argues. Speaking in Toronto, he said that current systems of payment are antiquated.
“I don’t want to be alarmist here, the systems are still functioning – but it could be improved,” Leduc said after the speech for Payments Canada.
“We have look at the future to do this because at one point it’s going to be very costly to operate those (older) systems.”
Customers now want and expect fast payment methods that are secure, Canada financial system must improve to meet these demands. If the system does not keep up with technology, customers could move to other forms of payments away from regulations. Leduc predicts this would cause issues for the economy.
“Modernizing systems when technological advances and other changes in the payments environment are occurring at such a fast pace is not only challenging, it is potentially paralyzing,” Leduc said.
“However, we all know that inaction is not without costs.”
He adds that non-profit group Payments Canada should be commended to beginning a plan to modernize the financial system. Along with the Bank of Canada a tech consortium called R3, the group has been working on Project Jasper, an experimental program to create an inter-bank payment system based on a digital platform.
The Bank of Canada, Payments Canada, a tech consortium called R3 and several financial institutions have also spent the last year working on an experiment called Project Jasper that tested an inter-bank payment system using a digital-ledger platform.