Systemically Important Payment System: Difference between revisions

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'''Systemically Important Payment Systems''' (SIPS) are [[payment systemssystem]]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]] 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.