Systemically Important Payment System: Difference between revisions

Revision as of 02:18, 23 August 2009

Revision as of 14:22, 14 January 2010

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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.

==OPERATIONOperation OFof Aa SIPS==

In 2001, the [[Bank for International Settlements]] (BIS) issued the "Core Principles for Systemically Important Payment Systems",<ref>{{cite web|url=http://www.bis.org/publ/cpss43.pdf?noframes=1|title=Core Principles Systemically Important Payment Systems|date=2008-01-01|accessdate=2008-12-30|publisher=[[Bank for International Settlements]]}}</ref> and these are summarised below. In certain banking circles, these have become known as the 10 Commandments.