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Abstract
Payment systems play a major part in the conduct of a country's monetary policy, financial sector and economic development. These systems are key tools for the economy in general and the banking and financial sectors in particular. The central bank plays a leading role, in investing, developing, enhancing and managing these systems. This research gives an overview of payment systems in Oman and their compliance to international standards and practices. Also illustrates the experience of payment systems approaches in developed countries (USA, UK and Australia) and regional Gulf Cooperation Council (GCC) countries. It shows that there are some gaps in Oman's payment systems with international standards and practices. Central bank of Oman (CBO) has to give the attention to these gaps to make payment systems more safe and effective and to comply with best practices. The financial crisis and technology changes have exposed how important the interconnections are among the banking system and payment systems. That suggests the need to strengthen the fundamental parts of a financial infrastructure, particularly in payment systems. The current issues in the Oman's payment systems may be an obstacle and against best practices. Therefore, they need to be highlighted for resolution.
Keywords: banking; National Payment Systems; Payment Systems; E-Commerce; Oman
© Ali Saqib and Ali Al-Jabri, 2011
INTRODUCTION
Payment systems are a core group of strategic information systems, which contribute towards economic development, especially in emerging economies, and form the foundation for financial sector and national information infrastructure developments (Khiaonarong, 2000). This has become a key concern for central banks in developing countries seeking to improve national financial infrastructures and to increase their potential of becoming major financial centers. The payment systems developed by the central bank are known as national payment systems (NPS).
Payment systems are fundamental to economic and financial activity both at a national and international level. Their orderly functioning is crucial, since most transactions of an economy are executed and settled through them. They are also a key infrastructure for the management of monetary policy, the implementation of which requires the efficient processing and settlement operations.
Payment systems are necessary for the sound functioning of financial markets. Financial stability mostly depends on the capacity and effectiveness of payment systems to control the systemic credit...