Financial Stability Review – September 2005
Box D: Core Principles for Systemically Important Payment Systems
The system should have a well-founded legal basis under all relevant jurisdictions.
The system's rules and procedures should enable participants to have a clear understanding
of the system's impact on each of the financial risks they incur through participation
The system should have clearly defined procedures for the management of credit risks
and liquidity risks, which specify the respective responsibilities of the
system operator and the participants and which provide appropriate incentives
to manage and contain those risks.
The system should provide prompt final settlement on the day of value, preferably
during the day and at a minimum at the end of the day.
A system in which multilateral netting takes place should, at a minimum, be capable
of ensuring the timely completion of daily settlements in the event of an
inability to settle by the participant with the largest single settlement
Assets used for settlement should preferably be a claim on the central bank; where
other assets are used, they should carry little or no credit risk and little
or no liquidity risk.
The system should ensure a high degree of security and operational reliability and
should have contingency arrangements for timely completion of daily processing.
The system should provide a means of making payments which is practical for its users
and efficient for the economy.
The system should have objective and publicly disclosed criteria for participation,
which permit fair and open access.
The system's governance arrangements should be effective, accountable and transparent.
Responsibilities of the central bank in applying the Core Principles
The central bank should define clearly its payment system objectives and should disclose
publicly its role and major policies with respect to systemically important
The central bank should ensure that the systems it operates comply with the Core
The central bank should oversee compliance with the Core Principles by systems it
does not operate and it should have the ability to carry out this oversight.
The central bank, in promoting payment system safety and efficiency through the Core
Principles, should cooperate with other central banks and with any other relevant
domestic or foreign authorities.