Financial System

The Bank for International Settlements

• The Bank for International Settlements (BIS): The Committee on Payment and Settlement Systems (CPSS)
• The CPSS core principles for systemically important payment systems

The Bank for International Settlements (BIS): The Committee on Payment and Settlement Systems (CPSS)

One of the functions of the Bank for International Settlements (BIS) is to provide a forum for international monetary and financial co-operation. In this regard, the BIS hosts meetings of and provides the secretariat for the Committee on Payment and Settlement Systems (CPSS). The CPSS was established by the Group of Ten (G-10) Governors in 1990 primarily to take over and extend the work of the Group of Experts on Payment Systems and the Committee on Interbank Netting Schemes. The CPSS is one of the permanent G-10 central bank committees reporting to the G-10 Governors.

The CPSS serves as a forum for the G-10 central banks to monitor and analyze developments in domestic payment, clearing, and settlement systems as well as cross-border and multicurrency schemes. It also provides a means of coordinating the oversight functions of the G-10 central banks with respect to these latter schemes. In addition to addressing general concerns regarding the efficiency and stability of payments and other clearing, settlement and related arrangements, the Committee focuses on the relationships between payment and settlement arrangements, central bank payments and settlement services, and the major financial markets that are relevant for the conduct of monetary policy. The CPSS has increasingly involved non-G-10 central banks in its recent work, in particular in the development of core principles for the design and operation of systemically important payment systems. The CPSS works closely, where needed, with other international organizations, such as the International Monetary Fund (IMF), the World Bank, and the International Organization of Securities Commissions (IOSCO).

The CPSS, under the auspices of the BIS, has published various reports in recent years covering large-value funds-transfer systems; securities-settlement systems; settlement mechanisms for foreign exchange transactions; and clearing arrangements for derivatives, retail payments, and electronic money. Publications of the CPSS can be found on the BIS website. In January 2001, the CPSS published its Core Principles for Systemically Important Payment Systems. The "Red Book" on payments systems in the G-10 countries is periodically revised, and a statistical update of the data is published every year.

The CPSS core principles for systemically important payment systems

In May 1998, the G-10 Committee on Payment and Settlement Systems (CPSS) established a task force to develop an overall framework of core principles for the design, operation, and oversight of payments systems in all countries. The principles were to represent a broad international consensus, but were not intended to impose a single payments-system model, since it was recognized that economies and institutional arrangements within countries vary considerably. To help achieve a broad consensus, the task force included not only representatives from the G-10 central banks and the European Central Bank, but also representatives from 11 other central banks in countries at different stages of economic and financial-sector development, along with representatives from the IMF and the World Bank. The task force also consulted extensively with groups of central banks in Africa, Asia, the Pacific Rim, Europe, and the Americas.

In January 2001, the task force published its final report, Core Principles for Systemically Important Payments Systems. Part 1 of the report outlines 10 core principles and four central bank responsibilities in applying those core principles. Part 2 of the report provides guidance on the interpretation and use of the core principles. It is addressed to designers, operators, and overseers of systemically important payments systems to help them make judgments about the policy and technical choices they face in building or operating such systems. (For a discussion of the core principles and their application in Canada, see Core Principles for Systemically Important Payments Systems and Their Application in Canada.