IBS Journal February 2015


Amman ©Thomas Stellmach, Flickr


securities. And this will be the first country in the region having all of these together, fully automated,’ says Bahou. For the buying and selling of gov-


ernment debt, the new platform, CMA’s DEPO/X, will be much more ‘discrete’ and banks will no longer have to bid by fax, so liquidity management will be much more straightforward for the CBJ. The function- ality will also include the ability to run simulations of different pricing scenarios, and will have much less human interaction. With the new RTGS, Jordan will


become the first country in the world to convert to the ISO 20022 MX message standard, Bahou claims. Since the world will move towards the MX standard in the next few years, it made sense for the CBJ to move onto it early, when the opportu- nity was presented. ‘We had restrictions previously with the MT format, in terms of figures we could include, language, spaces, number of characters and so on. But MX is much more flexible than MT,’ says Bahou. The old message types had presented particular problems with government debt issuances, she states. This should all change on 15th March, if the implementation sticks to plan. The CBJ is currently going through testing, and in January for the first time, six banks became directly involved in the project. Until then, their involvement had been restricted to educational workshops. ‘We didn’t want the banks to be involved in heavy technical issues, or be required to do heavy work or spend much budget. We decided to do everything internally with Swift and CMA,’ Bahou states. The banks’ tests were successful, allowing the CBJ to


move on to integration testing with its own accounting systems. ‘Everything else is completed,’ Bahou declares. While the banks’ input has been


marginal, the support received from Swift has been ‘overwhelming’, Bahou states. Swift ‘exceeded our expectations by far. Swift has worked with us on a daily basis with everything. Even if we don’t need it, they just stand by to give support and expertise. Although we didn’t ask for such consultancy service, they offered it.’ This reflects the importance of the project to Swift, especially regarding the move to the MX format. It is thought that Brunei, which is working with CMA and Swift as well, is also moving towards it, while a few other central banks, such as the Reserve Bank of India, are considering it, but Jordan is set to be the first. While Jordan is replacing its RTGS


system, it is also building a brand new ACH, having previously gone without. This is also being built with CMA, and should be ready by September this year. It will cover credits and direct debits, marking the first appearance of the latter on the Jordanian market. Up to now, the RTGS has been ‘abused’ by micro and small payments, says Bahou, while it was initially conceived as the system for large and systemically important payments to be settled. Some- times payments which could affect macro liquidity levels would get stuck behind tiny payments from some of the participants, so this was something which needed to be rectified. CMA’s BCS/X ACH system will allow other new tools as well, like bulk transfers and forward-dated payments. Finally, it will allow net rather than gross


© IBS Intelligence 2015


settlement clearing, which will mean that treasurers will not have to put so much capital aside. It will also clear payments in real-time. Overall, ‘it’s a much more comprehensive system’, Bahou states.


Mobile


As for the retail side, the country has had to retrace some of its initial steps in an attempt to get mobile payments off the ground. Jordan has already seen efforts by a couple of telcos, Zain and Orange, to launch proprietary mobile payments initiatives for their own subscribers. ‘They were segmented initiatives, not regulated and not comprehensive,’ Bahou explains. Neither of them were successful. So when the CBJ decided to start a conversation with the banks, telcos and other players aimed at building a single, robust and comprehensive platform, ‘all the stakehold- ers agreed’. The CBJ initially looked for a model


from another country which could be adopted and customised, but in the end decided that nothing was close enough, and set about drawing up specifications from scratch. What was required was a switch to perform two functions: the rout- ing and switching of all payments between banks and service providers; and clearing, with the switch producing net clearing positions to be fed into the new RTGS. The switch needed to be fully interoperable to allow different types of service providers to access it, says Bahou. One particular aim of the CBJ was to


make sure that two categories of Jorda- nians – those with only feature phones


www.ibsintelligence.com 29


analysis: jordan’s payments infrastructure


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