muhammad bin ibrahim : fostering safe, efficient and reliable payment systems keynote address by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the swift business forum malaysia, kuala lumpur, 1 march 2016. * * * as we transition into a high income and high value added economy, a resilient and efficient financial market infrastructure is an important enabler for economic growth and financial stability. payment and settlement systems play a critical role in the smooth functioning of the economy. a fact sometimes underestimated. in a larger perspective, it can also be leveraged upon as a strategic tool to facilitate regional market integration, strengthen the country ’ s competitiveness, and enhance the country ’ s position as an international islamic financial centre. today ’ s business forum organized by swift offers a valuable platform for the financial community to exchange ideas and identify opportunities for collaboration to enhance the financial market infrastructure as an indispensable part of a vibrant financial ecosystem in malaysia. in my remarks today, i would like to discuss the importance of open and competitive payment and settlement systems as a backbone for economic growth. i will also highlight the opportunities arising from greater standardization and interoperability and how banks can lead the way in facilitating greater straight through processing ( stp ) for greater efficiency and competitiveness. lastly, i will outline the importance of keeping pace with innovation, with a focus on real - time payments. importance of open and competitive payment and settlement systems to sustain improvements in the efficiency of payment services and lower barriers of entry, competition is vital in the payment landscape. strategies adopted by bank negara malaysia for payment system development in malaysia are therefore aimed to foster effective competition among the market players as a key driver to lower costs, enhance quality and innovation, and provide greater choice to the public. an example of this is reflected in bank negara malaysia ’ s recent reform measures for the payment card market. these measures were introduced in response to inordinate market power to hike prices and the lack of transparency and information in how prices of products and services were being set. the payment card market in malaysia is sizeable with 453. 9 million transactions valued at rm141. 5 billion in 2015. the payment card market is dominated by two major international payment card networks which cumulatively controlled about 90 % of market share in malaysia. prior to the implementation of the reform measures in mid - 2015, the growth of payment card terminals from 2013 to 2014 had remained stagnant at

. as a participant - owned institution, adequate safeguards to maintain swift ’ s neutrality and finality are essential to ensure it continues to serve its mandate as a trusted provider of secure financial messaging services to facilitate global connectivity. opportunities from greater standardization and interoperability let me now move on to the need for standardization and interoperability in payment and settlement systems. proprietary and legacy systems are costly and a source of much inefficiency as time and resources are needed to maintain different systems and facilitate interconnectivity. hence, there is much value for the financial community to collaborate through greater standardization to facilitate interoperability and innovation to achieve greater economies of scale and network multiplier effects. for instance, in the area of retail payments, the collective industry efforts to adopt chip technology based on international standards in 2003 had succeeded in eradicating counterfeit fraud. the investment cost of about rm200 million was recovered through potential fraud cost avoidance in just less than two years. the migration to adopt the international chip standard on an industry scale has boosted public confidence collectively in the use of payment cards. foreign cardholders including tourists had increased spending by about 77 % in the past 10 years, from rm5. 6 billion in 2005 to rm9. 9 billion in 2015. in the area of large value inter - bank payments, continuous efforts are also being made to modernize and enhance the rentas or the real - time gross settlement system to strengthen its resilience and elevate its efficiency and interoperability. in 2006, the rentasusd chats link, an inter - bank payment versus payment ( pvp ) settlement link, was implemented to eliminate foreign exchange settlement risk. this was followed in 2007 with the implementation of a delivery versus payment ( dvp ) settlement service for usd securities issued, deposited and traded in malaysia to eliminate settlement risk arising from trading of such securities. in 2012, malaysia was among the first countries in the world to have its large value inter - bank payment system assessed by the imf and the world bank under the financial sector assessment program, to be in compliance with all applicable principles of financial market infrastructures ( pfmi ). bis central bankers ’ speeches for 2015, the rentas daily average transactions totalled about 17, 900 with a value of rm217. 8 billion. this amounted to 4. 4 million transactions valued at rm53. 6 trillion throughout 2015. as part of the ongoing transformation of rentas, there is currently