Systemically Important Payment System: Difference between revisions

Revision as of 12:31, 22 May 2024

Latest revision as of 17:20, 14 February 2025

(2 intermediate revisions by the same user not shown)

Line 1:

{{Short description|Designation for financial payment systems}}

'''Systemically important payment systems''' ('''SIPS''') are [[payment system]]s which have the characteristic that a failure of these systems could potentially endanger the operation of the whole economy. In general, these are the major payment clearing systems or [[real-time gross settlement]] systems of individual countries, but in the case of Europe, there are certain pan-European payment systems. [[TARGET2]] is a pan-European SIPS dealing with major inter-bank payments. [[STEP2]], operated by the [[Euro Banking Association]], is a major pan-European clearing system for retail payments which has the potential to become a SIPS.

A '''Systemically Important Payment System''' ('''SIPS''') is a [[payment system]]s whose failure could potentially endanger the operation of the whole economy. In general, these are the major payment clearing systems or [[real-time gross settlement]] systems of individual countries, but in the case of Europe, there are certain pan-European payment systems. As of late 2023, the [[European Central Bank]] had designated five payment systems as SIPS, namely [[T2 (settlement system)|T2]], [[EURO1]], [[STEP2]], [[STET-CORE|CORE(FR)]], and [[Mastercard Europe]].<ref>{{cite web |website=International Monetary Fund |date={{date|2023-9-8}} |url=https://www.imf.org/en/Publications/CR/Issues/2023/12/07/Belgium-Financial-Sector-Assessment-Program-Detailed-Assessment-of-Observance-Assessment-of-542179 |title=Belgium: Financial Sector Assessment Program-Detailed Assessment of Observance-Assessment of the CPSS–IOSCO Principles for Financial Market Infrastructures Euroclear Bank}}</ref>{{rp|12}}

In the event of a bank failure, adherence to the rules for the operation of SIPS should prevent a domino effect whereby payment obligations of the failing bank are effected against the solvent banks. Clearly, this does not prevent the effects of a bank failure from spreading; however, it closes off one route.