Treasurer Josh Frydenberg may be handed sweeping new powers that would allow him to force oversight of a digital wallet operator, or intervene in Australia’s payment system for cyber security, resiliency, data or innovation-related reasons.
A review of the payments system, released Monday, recommends - among other things - affording the Treasurer a new “ministerial designation power”.
If implemented, it would offer the Treasurer a much broader set of intervention powers than currently sit with the Reserve Bank of Australia (RBA).
“The designation power [would] include the power to direct regulators to develop regulatory rules and the power for the Treasurer to give binding directions to operators of, or participants in, payment systems,” the review states. [pdf]
The review considered that the RBA did not have the authority to take action against digital wallet or buy now pay later (BNPL) operators, even if that action would be in the “national” or “public” interest.
It noted that the RBA had not tested whether or not it had the authority to intervene on these issues.
Rather than give the RBA more power, however, the review recommends creating the power and putting it into the Treasurer’s hands.
“To ensure that emerging payments issues that fall outside the scope of the RBA’s mandates are able to be brought within regulation where it is in the national interest to do so, the review recommends that a broader designation power should rest with the Treasurer,” it said.
Digital wallet operators - most likely Apple, which has long held out on banking industry demands to open access to the near-field communications (NFC) chips in iPhones - are a target for new proposed powers, whether they sit with the Treasurer or the RBA.
"The new designation power for the Treasurer or the expanded scope of the designation power of the RBA could be relied upon where oversight of a particular digital wallet would be in the national interest or the public interest,” the review stated.
In the Treasurer’s case, however, they would be able to intervene for a range of reasons, “including (but not limited to) national security, consumer protection, resilience of infrastructure, data-related issues, cyber security, AML/CTF, competition and innovation, and crisis management.”
In a statement, the government said it would “carefully consider the recommendations and observations made in the review.”
“Consultation on the recommendations will be conducted by Treasury ahead of the government finalising a response before the end of the year,” it added.