For the first time, the European Central Bank (ECB) has used its regulatory powers in the field of payment systems oversight, having identified four systemically important payment systems (SIPS) to guarantee efficient risk management and sound governance arrangements.
The four payment systems are TARGET2, operated by the Eurosystem and deals with major inter-bank payments; STEP2-T and EURO1, operated by the Euro Banking Association (EBA) CLEARING; and CORE(FR), operated by STET, a joint initiative of six leading French banks.
These systems were identified based on at least two of the four main criteria: market share, cross-border relevance, the value of payments settled, and provision of services to other infrastructures.
The list will be reviewed annually by the Eurosystem based on updated statistical data.
The SIPS regulation, which covers large-value and retail payment systems in the Eurozone operated by both central banks and private entities, is more rigorous than former oversight standards, offering sanctions and corrective measures for system operators in case of non-compliance. Aside from sound governance arrangements, the regulation seeks to guarantee efficient management of legal, credit, liquidity, operational, general business, custody, investment and other risks.
Benoît Cœuré, member of the Executive Board of the ECB and chairman of the CPSS, said: “With this regulation, Europe is consolidating international practice for the oversight of SIPS into EU law, as with past efforts for other financial market infrastructures, such as the European Market Infrastructure Regulation for the supervision of central counterparties and trade repositories, and the ongoing regulatory initiative for central securities depositories.”