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Systemically Important Payment Systems
A Systemically Important Payment System (SIPS) is a payment systems 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. As of late 2023, the European Central Bank had designated five payment systems as SIPS, namely T2, EURO1, STEP2, CORE(FR), and Mastercard Europe. 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. Operation of a SIPS In 2001, the Bank for International Settlements (BIS) issued the "Core Principles for Systemically Important Payment Systems", and these are summarised below. In certain ba ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Payment System
A payment system is any system used to settle financial transactions through the transfer of monetary value. This includes the institutions, payment instruments such as payment cards, people, rules, procedures, standards, and technologies that make its exchange possible.Biago Bossone and Massimo Cirasino, "The Oversight of the Payment Systems: A Framework for the Development and Governance of Payment Systems in Emerging Economies"The World Bank, July 2001, p.7 A payment system is an operational network which links bank accounts and provides for monetary exchange using bank deposits. Some payment systems also include credit mechanisms, which are essentially a different aspect of payment. Payment systems are used in lieu of tendering cash in domestic and international transactions. This consists of a major service provided by banks and other financial institutions. Traditional payment systems include negotiable instruments such as drafts (e.g., cheques) and documentary credi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Real-time Gross Settlement
Real-time gross settlement (RTGS) systems are specialist funds transfer systems where the transfer of money or securities takes place from one bank to any other bank on a "real-time" and on a " gross" basis to avoid settlement risk. Settlement in "real time" means a payment transaction is not subjected to any waiting period, with transactions being settled as soon as they are processed. "Gross settlement" means the transaction is settled on a one-to-one basis, without bundling or netting with any other transaction. "Settlement" means that once processed, payments are final and irrevocable. History As of 1985, three central banks implemented RTGS systems, while by the end of 2005, RTGS systems had been implemented by 90 central banks. The first system that had the attributes of an RTGS system was the US Fedwire system which was launched in 1970. This was based on a previous method of transferring funds electronically between US federal reserve banks via telegraph. The United ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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European Central Bank
The European Central Bank (ECB) is the central component of the Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's Big Four (banking)#International use, most important central banks with a balance sheet total of around 7 trillion. The Governing Council of the European Central Bank, ECB Governing Council makes monetary policy for the Eurozone and the European Union, administers the foreign exchange reserves of EU member states, engages in foreign exchange operations, and defines the intermediate monetary objectives and key interest rate of the EU. The Executive Board of the European Central Bank, ECB Executive Board enforces the policies and decisions of the Governing Council, and may direct the national central banks when doing so. The ECB has the exclusive right to authorise the issuance of euro banknotes. Member states can issue euro coins, but the volume must be approved by the EC ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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T2 (settlement System)
T2 is a financial market infrastructure that provides real-time gross settlement (RTGS) of payments, mostly in euros. It is operated by the European Central Bank and is the critical payments infrastructure of the euro area. With turnover in the trillions of euros every day, it is one of the largest payment systems in the world. It is one of three so-called TARGET Services, together with TARGET2-Securities (T2S) for securities and TARGET Instant Payment Settlement (TIPS) for fast payments. The acronym TARGET stands for Trans-European Automated Real-time Gross-Settlement Express Transfer. T2 replaced its predecessor RTGS system, TARGET2 (itself introduced in 2007-2008), on . Overview Like other RTGS systems, T2 allows individual banks to submit payment orders and have them settled in central bank money, namely the euro. T2 settles payments between banks as well as those related to the Eurosystem's own operations. Member banks can connect to T2 either via SWIFT or via NEXI-Colt ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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EURO1
EBA Clearing is a provider of pan-European payment infrastructure wholly owned by shareholders that consist of major European banks. It derives its name from the Euro Banking Association which was instrumental in its establishment in June 1998, but has always been a separate organization. EBA Clearing owns and operates major payment infrastructure in Europe for Euro payments between banks, including EURO1 for high value payments, STEP1 for payments of small and medium-sized banks, STEP2-T, a pan-European automated clearing house (PE-ACH), and RT1 for instant payments. Both EURO1 and STEP2-T have been identified as Systemically Important Payment Systems by the European Central Bank in 2014, together with TARGET2 and CORE(FR). EBA Clearing is based in Paris and has representative offices in Brussels, Frankfurt, Helsinki, London and Milan. Given their pan-European significance, both EURO1 and STEP2-T are under direct oversight by the European Central Bank. History The origin ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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STET-CORE
The STET-CORE system is a French interbank automated clearing house. STET SA, whose name refers to Systèmes Technologiques d'Echange et de Traitement (), is the system's operating company, based in Paris La Défense. CORE, whose name refers to COmpensation REtail ( being French for clearing), is the main platform developed by STET SA. The CORE platform supports the CORE(FR) clearing service for French banks, which in 2014 has been designated as a Systemically Important Payment System at the European level. CORE also supports other systems such as CEC (Centre for Exchange and Clearing, ) in Belgium. CORE is the largest European retail payment system by volume and value. STET has also developed a pan-European platform for instant payments named SEPA.EU. Overview STET was established in December 2004 by France's six main banks, namely BNP Paribas, Crédit Agricole, Crédit Mutuel, Groupe Caisse d'Épargne, Groupe Banque Populaire, and Société Générale, to replace a previou ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Bank For International Settlements
The Bank for International Settlements (BIS) is an international financial institution which is owned by member central banks. Its primary goal is to foster international monetary and financial cooperation while serving as a bank for central banks. With its establishment in 1930 it is the oldest international financial institution. Its initial purpose was to oversee the settlement of World War I war reparations. The BIS carries out its work through its meetings, programmes and through the Basel Process, hosting international groups pursuing global financial stability and facilitating their interaction. It also provides banking services, but only to central banks and other international organizations. The BIS is based in Basel, Switzerland, with representative offices in Hong Kong and Mexico City. History Background International monetary cooperation started to develop tentatively in the course of the 19th century. An early case was a £400,000 loan in gold coins, in 1825 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Financial Risk
Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. Often it is understood to include only downside risk, meaning the potential for financial loss and uncertainty about its extent. Modern portfolio theory initiated by Harry Markowitz in 1952 under his thesis titled "Portfolio Selection" is the discipline and study which pertains to managing market and financial risk. In modern portfolio theory, the variance (or standard deviation In statistics, the standard deviation is a measure of the amount of variation of the values of a variable about its Expected value, mean. A low standard Deviation (statistics), deviation indicates that the values tend to be close to the mean ( ...) of a portfolio is used as the definition of risk. Types According to Bender and Panz (2021), financial risks can be sorted into five different categories. In their study, they apply an algorith ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Financial Market Infrastructure
Financial market infrastructure refers to systems and entities involved in Clearing (finance), clearing, Settlement (finance), settlement, and the recording of payments, Security (finance), securities, Derivative (finance), derivatives, and other financial transactions. Depending on context, financial market infrastructure may refer to the category in general, or to individual companies or entities (thus also used in plural: financial market infrastructures). Examples Examples of financial market infrastructure firms include payment systems, Settlement (finance), securities settlement systems, Central counterparty clearing, central counterparties, Central securities depository, central securities depositories, and Trade Repository, trade repositories. Some financial infrastructures have a global reach, such as financial messaging service SWIFT, foreign-exchange settlement service provider CLS Group, and international central securities depositories Euroclear Bank and Clearstream ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Systemic Risk
In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to the risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system.Banking and currency crises and systemic risk George G. Kaufman (World Bank), Internet Archive It can be defined as "financial ''system'' instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries". It refers to the risks imposed by ''interlinkages'' and ''interdependencies'' in a system or market, where the failure of a single entity or cluster of entities can cause a casca ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |