Uzbekistan: Ensuring Stability of the Payment System

Posted on Jul 22, 2021 by Ilkhomjon Abdugafarov, Deputy Chairman, Central Bank of Uzbekistan

Over the last decade, the Central Bank of Uzbekistan (CBU) has significantly modernized its payment systems and services to meet the preferences of businesses and consumers in the digital era. As in many jurisdictions across the globe, Uzbekistan’s digital transformation has been accelerated by the Covid-19 pandemic, with new modes of mobile, online, and contactless payments now available throughout the country.

A number of new payments initiatives have recently been introduced, enabled by the 2020 passage of the Law of the Republic of Uzbekistan, “On Payments and Payment Systems.” The adoption of this Law has introduced more efficient payment transactions and the widespread introduction of innovative technologies and ensures the effective, reliable and safe functioning of payment systems.

1. Ensuring Stability of Payment Systems

Over the past year and a half, the socio-economic situation in Uzbekistan made it necessary for CBU to strengthen its measures to further expand the infrastructure of the country’s payment systems. Measures were also needed to improve payment systems' institutional and regulatory framework, ensure their smooth functioning and develop a competitive environment in the payment services market.

First, CBU established criteria for determining the significance of payment systems for effective risk management in the payment services market and for assessing and ensuring stability.

Per international best practice in banking systems, CBU continued its work to automate many banking services by introducing information and communication technologies for payment services, thereby expanding the range of remote banking services and creating favorable conditions for new participants to enter the payment services market.

Note that CBU placed the main emphasis on the following initiatives: expanding the coverage of contactless payments (QR codes, NFC, etc.); implementing the widespread use of an automated scoring system; introducing digital identification and credit conveyor; increasing information security (cybersecurity) of banking data and systems; and broadly introducing new concepts and technologies (i.e. fintech, digital banking) into the banking industry.

1.1. Improvement of Payment Systems

Improving the legal framework for regulating payment systems

The development of a competitive environment in the payment services market—including penetration of new non-bank payment institutions and payment system operators into the market and the introduction of digital banking technologies—prompted the need for the creation and improvement of documents to regulate activities in payment systems in accordance with international standards.

In particular, in the most recent reporting period ...


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Tags

Modernisation, Financial Stability, Financial Inclusion, Regulations, Retail Payments