utilities ” and to monitor the compliance of those systems. the european equivalent to dodd - frank is the european market infrastructure regulation ( emir ), which sets rules for central counterparties and trade repositories. other countries that introduced or plan to introduce strengthened regimes include the uk, canada and hong kong. a common feature of these regulatory regimes is their risk - based approach. regulators focus their oversight activity on the largest systemic risks to financial stability. typically this involves classifying certain fmis as systemically important and paying particular attention to those systems. so far these requirements only apply to otc interest rate derivatives. formerly the committee on payment and settlement systems ( cpss ). http : / / www. bis. org / cpmi / publ / d101. htm. bis central bankers ’ speeches the reserve bank ’ s oversight role in the international context, the reserve bank ’ s regulatory framework in the payments area is at the non - intrusive end of the spectrum. the bank and fma have a relatively low level of regulatory authority in this area. under the bank - fma designation regime 6, fmis seeking designation must have their rules approved by the bank and fma. however, this regime is voluntary and, for fmis not choosing to be designated, the bank must rely on suasion and industry engagement to promote its stability and efficiency objectives. in promoting the soundness and efficiency of the financial system, and consistent with the internationally agreed principles for fmis, the bank has four core objectives that fmis are encouraged to follow as responsible “ nz inc. payments citizens ” : • the first is good governance. it is important that fmis are well managed by appropriately skilled people. governance arrangements should ensure that the views of all relevant stakeholders are considered. • the second is a sound risk management framework, covering legal, credit, liquidity, operational and other risks. • the third is continuity of service. given their role at the heart of the financial system, it is important that fmis operate continuously. this means that a system should be able to cope with potential disruptions like technical problems and the failure of a participant. • the fourth is fair and open access. fmis should have risk - based and publicly disclosed criteria for participation that promote fair and open access with no unwarranted barriers to entry. fair and open access should encourage competition between participants and innovation. the bank promotes these objectives through consultation with the industry and we especially value the relationship

with payments nz in helping to achieve good results. we are confident that the requirements for designated fmis will ensure that they meet the four core objectives. however, we would like to see these requirements extended to all systemic fmis. in this regard we believe there is a case for some strengthening of the current regulatory framework. our concern relates to situations where our objectives for the safety and efficiency of systemic fmis cannot be achieved through suasion alone. another area where we believe there is a need for change is crisis management. when there is a crisis, particularly in a systemic fmi, there is a need for prompt and deliberate action to restore normal operations and mitigate the flow - on effects of the disruption. in past systemic events, for example the anzac day disruption, the industry has looked to the reserve bank for leadership. we are happy to play such a role but would like to formalise crisis management roles and responsibilities. the bank is currently looking to establish an enhanced oversight regime based around systemically important fmis with attention given to crisis management powers. our approach will be aligned with international principles and, while remaining near the non - intrusive end of the international spectrum, will focus on the core objectives for a sound and efficient payment system. the bank does not seek to prescribe the shape of the payment system or the direction of innovation. other national regulators take a range of approaches on such strategic issues. across the tasman for example, the rba and payments system board can take quite strong positions on industry shape and direction. in our own case, we often express views on once a payment system is designated, all payments through that system are final and irrevocable. bis central bankers ’ speeches industry direction, particularly if there are implications for systemic risk, but we prefer to see market - based solutions. an example of this is the current discussion about the future of domestic debit, where the bank has not taken a position. we acknowledge the arguments in favour of preserving a domestic debit product so that competing payment instruments are available. however, we also note the popularity of scheme debit cards given their ability to facilitate on - line and overseas payments. it may be that the cost of re - investing in the domestic product to provide comparable functionality is too high. in recent times, the most significant change to the payments landscape has been the settlement before interchange ( sbi ) arrangements for retail payments, introduced in 2012. these arrangements have helped to address long - standing concerns about