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Systemically Important Payment Systems (SIPS) are payment systems 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 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]] 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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