Systemically Important Payment System: Difference between revisions

Revision as of 13:02, 16 August 2018

Revision as of 12:22, 4 February 2023

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'''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.

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.

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In 2003 the [[European Central Bank]] (ECB) further elaborated on how the principles should be applied in Euro retail payment systems.<ref>{{cite web|url=http://www.ecb.int/pub/pdf/other/retailpsoversightstandardsen.pdf|title=OVERSIGHT STANDARDS FOR EURO RETAIL PAYMENT SYSTEMS|date=2003-05-01|accessdate=2008-12-30|publisher=[[European Central Bank]]}}</ref>

Subsequently, in response to the perceived increased risks of terrorist attacks, the ECB in 2006 published detailed oversight expectations for business continuity planning, greatly expanding on core principle number 7.<ref>{{cite web|url=http://www.ecb.int/pub/pdf/other/businesscontinuitysips2006en.pdf|title=BUSINESS CONTINUITY OVERSIGHT EXPECTATIONS FOR SYSTEMICALLY IMPORTANT PAYMENT SYSTEMS |date=2006-06-09|accessdate=2017-12-06|publisher=[[European Central Bank]]}}</ref>

BIS added an additional recommendation in relation to countries which use cheques. It urged the operators of cheque clearing to have special regard to the fact that cheques may be dishonoured and returned some days after presentation, and this poses special risks. This is particularly relevant to countries such as Britain, Ireland, France, and US and should be regarded as the 11th commandment of payments.

BIS CPSS is currently preparing for the new global standards for not only payment systems but also securities settlement systems, central counterparties and trade repositories. The new standards (Principles for FMI) is now under market consultation and are going to be published in 2012.

==Core principles==