6 Oct 2017 19:09

Russia's Central Bank proposes national system to register financial transactions

SOCHI. Oct 6 (Interfax) - The Central Bank of Russia (CBR) is proposing to create a national system for registering financial transactions, CBR first deputy chairman Sergei Shvetsov said at the Finopolis-2017 forum in Sochi.

"We're proposing to create a national registration system for financial transactions. This is an important element that, of course, should be complemented by a remote identification system, government services, [services of] the Federal Tax Service. This is a system that will, of course, work with payment systems. The main point of this initiative is that all transactions on the financial market that are acquired by our population are reflected in one repository," Shvetsov said.

He said that, unlike current repositories, which take into account over-the-counter repo deals and transactions with derivatives, the unified repository will have a record about the acquisition of a given service by the consumer. This record will be legally sufficient for the consumer and counterparty to defend their interests in court, before the ombudsman and in appeals to the CBR, Shvetsov said.

"The platform should be able to accept users with a low entrance ticket so that the market is competitive," he said, noting that the creation of a central system for registering transactions would also make it possible to bring consumers to a uniform position in all their relations on the financial market. "In other words, the consumer will see everything in one place and this is where there will be relations with the tax inspectorate and relations with other participants of this infrastructure," he said.

According to the Central Bank, the new system should foster trust among consumers, because the consumer will know that, when buying a product remotely, they can log in to their personal account and make sure they received the product or service.

"The next point is how financial products will be integrated in the system. Most likely they will be smart contracts," he said.

He said that not a single financial product is static: interest is accrued, if there's a floating rate - indicators are calculated, for which there is a link. If it is an insurance product investing in life insurance, then regular payments which the consumer makes are monitored. If it is a recurring deposit, "then it also has a life of its own and therefore smart contracts are quite appropriate here," he said.

"It's important for the system to have an open interface. It should allow both producers to come and sell their products, as well as allow consumers to connect directly to the system," he said.

He also said that two new elements would appear which do not currently exist on the financial market. "These are supermarkets which represent the seller, and namely, prepare marketing programs and integrated proposals for the consumer. And they act as agents for sellers. And bots which are already acting on the side of consumers are more like brokers," he said.

He said that according to Central Bank estimates, there should only be one new platform, but the remaining elements should be either highly competitive or not very competitive.

He said that "the producers themselves of financial products, payment systems, bot suppliers, depository services, kwc information suppliers and supermarkets" could be those that become highly competitive.