The need to modernize The Bahamas’ payments system was acknowledged by the Central Bank since the late 1990s when the Bank commissioned a special study to identify the available options for The Bahamas and to assist with the initial formulation of a strategy. Although the existing system was working adequately, modernization was considered necessary in order to bring the domestic payments systems up to international standards and to serve the development needs of all sectors of the economy.
The design concepts and features driving the Payment System Modernization Initiative (PSMI) have benefited from established international standards on modern payments systems, and the role that central banks are expected to play in such regards. These include the useful work spearheaded by various committees established by the Bank for International Settlements (BIS), the G10 central banks’ Committee on Payments Settlements and the modernization experiences of former Soviet-Bloc countries in Eastern Europe.
The PSMI is being directed by the National Payments Council (NPC), established in 2003, after an extensive survey of the economy’s needs and expectations for banking and retail transactions (Phase 1). The NPC formally broadened ownership of the modernization process to the clearing banks, and collaborated closely with the Government and public corporations, as they are important stakeholders in the payments system.