This was noted by the Rwandan Central Bank Governor Francois Kanimba while presiding over the on-going three day workshop on Payment and Settlement Systems.
Kanimba said, "Having a modern and efficient payment, clearing and settlements systems should be an essential requirement for the development of a market economy and well functioning financial markets."
The workshop is organised by the EAC secretariat and the National Bank of Rwanda, in partnership with the African Development Bank.
The objective of the workshop is to make an assessment of how far the EAC region has gone in building robust payment systems in the region, and draw an action plan to accelerate the integration of national initiatives into a regional Payment Systems Network. This will eventually facilitate a smooth transfer of funds and securities from one country to another.
Kanimba said that EAC Central Banks are playing a critical role at different stages of Payment Systems modernization in the region and that the region has recorded steady developments in the payment and settlement systems.
"Central Banks within EAC are encouraging several retail payment systems including mobile payments, remittances and various card-based payment products.
This demonstrates the Central Banks' recognition of the vital role payment systems play in the economy," he said.
Some of the challenges mentioned is that recent market practices in the implementation of Payment Systems, a company can open its own retail payment system without any defined regulatory framework.
"Indeed, we have seen some cases, where for instance, a company that does not fall under the direct supervision of a Central Bank and this have brought new regulatory challenges," Kanimba said.
He promised that Central Banks would strive to balance competition and innovation while at the same time ensuring consumer protection.
In a bid to ensure consumer protection, Governor encouraged the establishment of common payment platforms that ensure interoperability and economies of scale.
The new payment system is expected to ease monetary policy implementation, as the currency in circulation out of the banking system will significantly reduce, providing more room to increase the efficiency of monetary policy instruments in managing liquidity.
"Once we will have achieved the integration of our Payment and Settlement Systems and ensured that our business community moves with less cash, then we will have made one step further towards the creation of the Monetary Union," Kanimba emphasized.