, published a new vision and strategy document ( vision 2010 ) for the nps in april this year. the purpose of this document was to provide high - level strategic guidance for the payment system up to 2010. finally, there appears to be a general misunderstanding that the bank has a " hands off " approach to the oversight and regulation of the nps. i would remind all nps stakeholders that section 10 ( i ) ( c ) of the south african reserve bank act states clearly that the bank, " perform such functions, implement such rules and procedures and, in general take such steps as may be necessary to establish, conduct, monitor, regulate and supervise payment, clearing or settlement systems ”. furthermore, as i noted earlier, the 2004 amendment to the nps act makes provision for the bank to issue directives pertaining to the nps. we raise this issue as the bank will soon be issuing directives in terms of the nps act which will regulate non - bank participants in the nps for the first time. we have noticed that the number of nonbank participants has increased to the extent that the risk associated with their operations and the risk that they bring to the clearing and settlement environment requires some formalisation. of particular relevance in this regard are system operators and third party service providers, who mostly operate in or on behalf of the retail sector. we want to make it clear, particularly to the banking sector, that strict regulation will be applied as far as the nps is concerned. this should not be perceived negatively, nor do we wish to stifle innovation or competition in the industry. however we need to apply strict supervision and regulation to both bank and non - bank participants in the critical area of the nps and avoid the risk of turbulence that may emanate from a hands - off approach to regulation. this may require some adjustment to current structures in the nps and the bank will have to start playing a far more prominent role in areas such as supervision, regulation and licensing of participants. we also need to ensure that these newly regulated entities have channels to engage with the bank and other stakeholders, including pasa, in a fair and transparent way. the bank has already initiated discussions with various international central banks and consulted with nps stakeholders with a view to adopting a model which will facilitate such engagement. this may take some time but i can assure you that the bank will continue with the collaborative approach it has used for nps matters in the past before making any final decisions in

- operation between the members of pasa and the bank. while the bank supports the consultative and collaborative approach, we have observed on occasion that competitive issues between the banks themselves, and the banks and other stakeholders, can impede the collaborative process and sometimes cause unnecessary delays in the implementation of certain initiatives. it should be remembered that collegiality, co - operation and inter - operability are vital elements of a world class payment system. to achieve this does sometimes require an above average effort from stakeholders. in this regard, the bank is committed to ensuring that new developments or any response to problems in the nps will always be taken in the interest of the system as a whole, and not in the interest of individual participants. 3. achievements in the nps over the past 10 years collaboration between the bank and the banking industry, particularly with pasa, has resulted in the south african payment system being recognised as an example or model for development initiatives in the region and internationally. much has been achieved during the past ten years and although i do not want to go into detail of any particular achievement, there are a few major milestones which are worth highlighting tonight. the first major milestone was reached on 9 march 1998, when the south african multiple options settlement ( samos ) system was implemented, enabling banks to settle their obligations on a real time gross settlement basis ( rtgs ). various changes and upgrades to the samos framework have been implemented since 1998, including facilities for the south african financial markets to conform to international best practice with the introduction of the principle of delivery versus payment ( dvp ) for settlement of equity, bond and other financial market transactions. the second milestone was reached with the promulgation of the nps act in october 1998. the act provides the sarb with the mandate to oversee and monitor the payment system and provides the objectives and rules for the payment system management body. it also provides for the final and irrevocable settlement in the samos system. the oversight function of the bank was extended in the amendment of the act in 2004 when the bank was given the power to issue directives to any person regarding a payment system or the application of the provisions of the act. i will return to the role of the bank in the nps later on. the third highlight relates to risk - reduction initiatives in the retail payment environment. the blue book identified several risk - reduction measures to be implemented in the retail environment. although risk reduction is an ongoing process in the