By: Audrey Raymonda John
The West African Institute for Financial and Economic Management (WAIFEM) yesterday started a five days regional course on Financial Market Infrastructure and Payment Systems in Freetown, Sierra Leone.
The five day course began on August 14 and will end on the 18 August 2023 at the New Brookfields Hotel in Freetown.
Representing the Acting Bank Governor of Sierra Leone, the deputy Governor, Alhaji Sheik Yayah Sesay emphasized the relevance and timeliness of this course, against the background when Financial Market Infrastructure and Payment Systems are going through a period of significant change as their importance across the financial services ecosystem grows.
He stated that “As you may be aware that Financial Market Infrastructure (FMI) and Payment Systems plays crucial role in the functioning of a country’s financial system, and these systems provide the necessary infrastructure for the efficient and secure transfer of funds, assets, and financial instruments between various participants in the financial markets. According to him they catalyze economic growth and development, facilitating transactions and fostering confidence among market participants.”
He disclosed that this course presents a significant opportunity to delve into the critical aspects of Financial Market Infrastructure (FMI) and Payment Systems that underpin the functioning of the West African regional economy. He maintained that in todays interconnected and rapidly evolving financial landscape, it is crucial to ensure these infrastructures’ robustness, resilience, and integrity.
He informed that the institutions systems and arrangements that facilitate the trading, clearing, settlement, and custody of financial instruments are critical components of the financial system, they include various entities and systems such as Stock Exchanges, which provide a platform for trading securities (stocks, bonds, derivatives) among investors; Central Counterparties (CCPs) which act as intermediaries between buyers and sellers in financial markets.
According to him they help manage counterparty risk by becoming the buyer to every seller and the seller to every buyer, reducing the risk of default, Central Securities Depositories (CSDs) which are responsible for the safekeeping, clearing, and settlement of securities transactions, ensuring the ownership transfer of securities., and Payment Systems: While payment systems are often considered separately, they are also a crucial part of the FMI.
Mr Sesay said the payment systems enable the transfer of funds between individuals, businesses, and institutions, facilitating transactions and commerce. To be specific, Payment systems are mechanisms that allow individuals, businesses, and financial institutions to transfer funds from one party to another. They provide the infrastructure for the transfer of funds between individuals, businesses, and financial institutions.
Explaining the objectives of the course in his welcome address, Mr. Amadou Kora, Director, Financial Sector and Payment Systems at WAIFEM, on behalf of the Director-General, WAIFEM, schooled participants that the course aims to give participants a comprehensive understanding of the critical components that underpin the functioning of modern financial systems.
He said the course will also provide participants with an understanding of the intricacies challenges, and opportunities associated with these critical components of the financial market infrastructure and payment system.
Mr. Kora noted that the broad theme to be covered in the course include: understanding FMIs, and payment systems, financial infrastructure components, risk management, regulations and oversight, clearing and settlement processes, payment mechanisms, technology and innovation, interconnection and interoperability, systemic risk management, role of central bank, money transfer (remittance) system, among many others.