important, but perhaps not as important as the questions'what are the board's goals?'and'does the board have the tools, and the independence, to pursue them?'it goes without saying that a central bank must also have the highest reputation for probity, which carries obvious requirements for the behaviour of board members, governors, management and staff. but in addition, as in the commercial arena, it must also have, and be seen to have, strong formal internal governance processes – in financial management, audit ( including external audit ) and risk management – so as to be able to provide appropriate assurance to its community. as in the commercial world, risk management is a rapidly growing area in central banks. it is likely, moreover, that an increasing share of the assistance given to emerging market countries in the next decade will be in helping them develop their own risk management and auditing capabilities. 2 / 4 2. arm's length dealing with financial markets the second key arrangement for a well - functioning financial system – again using a fairly broad definition of the word'governance'– is that the public sector deals at arm's length with financial markets. in other words, markets set financial prices and allocate financial resources. there are two dimensions here. first, governments should pay the market price for resources that they seek to use for public policy purposes. this means borrowing in the market ( if borrowing is needed ) at the market rate, not at an artificially reduced rate from banks or the central bank. ( this is, of course, a key element of central bank independence. a central bank can't seriously hope to run an independent monetary policy if the demands of government finance dominate its balance sheet. ) for markets to be able to price government borrowing properly, they need some information about governments'intentions – a degree of fiscal transparency is required. such transparency is a good'governance'principle for public policy anyway ; countries which have adopted it, including australia, find this is ultimately repaid by governments being able to obtain funding more cheaply. second, care must be taken when governments direct financial resources by using their ownership stakes in financial institutions. at early stages of development, there may be a strong case for extensive public - sector involvement, where the private system is in its infancy. this was seen to be the case in australia in earlier times. but as time goes by and the private sector becomes more vibrant, the benefits of extensive public - sector participation have to

over the past 10 years, the annual number of debit card transactions per person in australia has risen from around 80 to around 260. most debit cards in australia are dual - network cards. that is, payments made using these cards can be processed across two networks. the network brand on the front, and the most obvious, is typically an international scheme – mastercard or visa. on the back is usually the eftpos brand, the australian domestic debit system. the payments system board and the reserve bank have been supportive of these cards because they provide convenience and choice to both consumers and merchants. when dipping or swiping their card, consumers could choose the credit button to direct the transaction through the international scheme or the cheque / savings button to direct it through the eftpos system. merchants could also indicate to customers which network they would prefer to be used. so dual - network cards can play a role in keeping downward pressure on the costs of card acceptance to merchants ( and indirectly to consumers ). the move to contactless payments ( ‘ tap - and - go ’ ), however, has muted some of the competitive pressures that can come from dual - network cards. since eftpos moved to tap - and - go later than mastercard and visa, a substantial number of payments that were previously processed by the eftpos network are now being processed by the international schemes. while consumers would not have noticed anything different, businesses have seen their costs of card acceptance rise as processing through the international schemes is more expensive than eftpos. https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 05 - 16. html 7 / 8 5 / 16 / 2019 leaning in : towards better payment and clearing systems | speeches | rba the bank has attempted to ensure that merchants continue to have choice by obtaining commitments from banks to allow their merchant customers to choose the network through which contactless transactions are processed. some smaller acquirers – for example tyro and first data – have been faster than the major banks to provide their customers with this functionality. but the major banks are now offering or are about to offer merchant choice. this should assist in keeping downward pressure on the fees that merchants pay. but as payments move to different form factors, such as mobile phones or wearables, and new technologies are introduced, there is a risk that some may use it as an opportunity to lock out competitors. the