Page 80 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

SUSTAINABILITY

Principle 7: The public authorities and private sector stakeholders involved in an international interoperability
agreement should regularize the public consultative arrangements to ensure that the evolution of the agreement
in terms of new business functions, services, and operating procedures is broadly responsive to, beneficial for,
and accepted by stakeholders.

Key issues
7.1 The consultative arrangements that were created for the planning and implementation stages of the
agreement should not be intended to disappear once the agreement is rolled out.
51. Maintaining consultative arrangements is crucial for achieving the continuous buy-in and commitment
that will accelerate the initial migration of transactions and promote future volume growth. Likewise, public
sector authorities’ ́cooperative oversight arrangements that were devised and established in the planning phase
should be meant to operate on an ongoing basis once the international interoperability agreement becomes
operational. To ensure the effectiveness and transparency of the oversight arrangement, the regulatory
standards and the detailed oversight policies and procedures that will be applied to the agreement should
be developed and published. A communication program for broader audiences should be maintained after
implementation. The program should inform those audiences not only on achievements and milestones, but
also on future plans and developments intended to better meet the needs of participants and other market
players and users.
Principle 8: The public authorities involved in an international interoperability agreement should establish
effective cooperative public governance, regulatory, and oversight mechanisms to allow for the effective
oversight of the linked or shared PSIs.

Key issue

8.1 A cooperative oversight body for the international interoperability agreement should be established with
senior representatives from the participating national PSI supervisory and/or regulatory authorities that
are relevant to the type of agreement.
8.2 The cooperative oversight body should be developed in a manner that is consistent with Responsibility
E of the CPSS-IOSCO Principles for financial market infrastructures .
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52. The cooperative oversight body should be given a mandate to monitor and assess the linked or shared
PSIs against the recognized standards and, if necessary, to propose or even undertake regulatory action. In
any case, national oversight authorities should stand ready to cooperate with the body and should be able to
exert control over aspects of the agreement that affect their jurisdictions. Therefore, as part of the framework

23 This responsibility calls for central banks, market regulators, and other relevant authorities to cooperate with each other, both
domestically and internationally, as appropriate, in promoting the safety and efficiency of financial market infrastructures. As the
CPSS-IOSCO report explains, central banks, market regulators, and other relevant authorities should cooperate with each other,
domestically and internationally (that is, on a cross-border basis), in order to support each other in fulfilling their respective
regulatory, supervisory, or oversight mandates with respect to financial market infrastructures (FMIs). Relevant authorities should
explore, and where appropriate, develop cooperative arrangements that take into consideration i) their statutory responsibilities,
ii) the systemic importance of the FMI to their respective jurisdictions, iii) the FMI’s comprehensive risk profile (including consid-
eration of risks that may arise from interdependent entities), and iv) the FMI participants. The objective of such arrangements is
to facilitate comprehensive regulation, supervision, and oversight and provide mechanisms whereby the responsibilities of the
authorities can be fulfilled efficiently and effectively. Authorities are encouraged to mutually cooperate to reduce the likelihood
of gaps in regulation, supervision, and oversight, which could arise if they did not coordinate, and to minimize the potential dupli-
cation of effort and the burden on the FMIs or the cooperating authorities. Relevant authorities should cooperate with resolution
authorities and the supervisors of direct participants, as appropriate and necessary, to enable each to fulfill their respective
responsibilities. Cooperative arrangements should foster efficient and effective communication and consultation among relevant
authorities. Such arrangements should be effective in normal circumstances and should be adequately flexible to facilitate effec-
tive communication, consultation, or coordination, as appropriate, especially during periods of market stress, crisis situations,
and the potential recovery, wind-down, or resolution of an FMI. Inadequate cooperation, especially during times of market stress
and crisis situations, may significantly impede the work of relevant authorities.

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