Systemically Important Payment System: Difference between revisions

Revision as of 12:32, 22 May 2024

Revision as of 21:43, 25 December 2024

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

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. [[TARGET2T2 (RTGS)|T2]] 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.

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.