haruhiko kuroda : the evolution of payment and settlement systems and the role of central banks speech by mr haruhiko kuroda, governor of the bank of japan, at the symposium for the 30th anniversary of the center for financial industry information systems, tokyo, 2 december 2014. * * * introduction it is a great pleasure to have this opportunity to speak at the symposium commemorating the 30th anniversary of the center for financial industry information systems ( fisc ). since its establishment in 1984, the fisc has greatly contributed to strengthening the safety of the financial information system and improving the efficiency of financial services in japan. as it marks its 30 - year milestone, i would like to express my respect and gratitude for the work it has done over the years. for the past 30 years, the fisc has been engaged in enduring work such as developing industry guidelines and standards. these include “ fisc security guidelines on computer systems for banking and related financial institutions ” and “ fisc information system audit guidelines for banking and related financial institutions. ” it also publishes its “ white paper on financial information systems ” every year. with new payment methods such as internet banking and electronic money making their appearance, maintaining the security of such payment methods has become an important issue. the fisc has also been active in addressing a number of challenges related to information systems by revising the industry guidelines or standards in order to address these issues. furthermore, through its wideranging research, analysis, and publicity activities – including various surveys or the organization of study groups and seminars – the fisc ’ s efforts have significantly supported the development of payment and settlement systems, through which economic and financial transactions are “ settled. ” today, under the title, “ the evolution of payment and settlement systems and the role of central banks, ” i will outline these systems ’ developments from the past to the future, and explain the present and future challenges to be tackled by the bank of japan while touching on the role of central banks within the systems. i. evolution of payment and settlement systems looking back over several decades at the history of payment and settlement systems in japan, both efficiency and safety have significantly improved. to put this in perspective, certain periods from the middle of the 1960s to the beginning of the 1990s were ones when more emphasis was put on raising efficiency. since then, the emphasis has shifted to enhancing the safety of the systems. let me be more concrete. from the middle of the 1960s to the beginning of the 1990s, on

as helping market participants formulate appropriate market practices spanning from execution to settlement. these activities are conducted from the viewpoint that payment and settlement systems provide the foundation for the stability of the financial system and the sound development of the economy. looking to the future of payment and settlement systems, central banks are expected to contribute to economic growth and financial stability not only by improving their own payment services but also by helping financial institutions enhance services provided by those institutions. iii. bank of japan ’ s initiatives : present and future next, i would like to explain the bank ’ s initiatives in four areas at present and in the future. they are namely ( i ) to build the new boj - net and extend its operating hours, ( ii ) to consider improving cross - border transactions, ( iii ) to support enhancing retail payment services, and ( iv ) to support shortening the jgb settlement cycles. let me explain these items in turn. a. new boj - net and extension of its operating hours at present, the bank is in the middle of building the new boj - net. since its inception in 1988, the environment surrounding the boj - net has been changing dramatically. on the back of financial globalization and innovation in information technology, people involved in major payment and settlement systems around the world have been making efforts to strengthen the it infrastructure to cope with the diversified needs in transactions and settlement. on the part of financial institutions, connecting their computer systems directly with the boj - net has become widespread, and this enables those institutions to realize straight - through processing ( stp ). moreover, a cross - border linkage among payment and settlement systems has become more widespread, as exemplified by the enlargement of cross - currency pvp transactions through the cls and the cross - border linkage of securities settlement systems. it is against this background that the boj - net needs to meet the diversified needs in response to the enlargement of the network structure and the globalization of financial transactions. the new boj - net, which is due to be in full operation in october 2015, is based on several overarching principles. 3 first, we employ the latest information technology to enrich our services and improve convenience for our customers in the future. second, the new bojnet is designed to accommodate greater flexibility so that it can respond to ongoing and future banking needs and market developments. last, but not least, it enhances accessibility, allowing longer operating hours, in light of the global