The Policy and Oversight Role of the Central Bank vis-à-vis Payment and Securities Settlement Systems
The Central Bank plays an important role in relation to policy and oversight aspects of the payment and securities settlement systems used in Ireland by:
- Promoting their safe and efficient operation by assessing them against established Eurosystem oversight principles and standards
- Ensuring that they do not cause, or add to, instability in the operation of financial markets
- Keeping up-to-date with significant payment and securities settlement systems developments at Eurosystem/EU level and acting as a catalyst in relation to policy development in Ireland in these areas
- Representing Ireland on Eurosystem committees that deal with payment and securities settlement systems matters, such as the ECB’s Market Infrastructure and Payments Committee (MIPC) and its associated working groups
- Supporting the Department of Finance in relation to relevant EU Commission working groups/EU legislation generally.
Oversight of payment systems is aimed principally at:
- Ensuring that payment and securities settlement systems used in Ireland are safe, effective and efficient, and
- That access to such systems by all parties needing to do so is not restricted.
These are seen as core requirements for maintaining financial stability and for meeting the business needs of the economy. The Central Bank’s oversight activities focus on:
- The domestic retail paper-based clearing system (for which it has sole oversight responsibility)
- The pan-European/external systems used for electronic payments (whether large-value or ‘retail’) and card payments, and for securities settlements. The Central Bank is not the primary overseer of any of these systems, but shares responsibility with the authorities that have this role.
For example, the ECB acts as the lead overseer of TARGET2, EURO1 and STEP2. A co-operative oversight model is employed in relation to these systems, whereby the ECB acts in close co-operation with the national central banks of the countries that use them.
Likewise, the National Bank of Belgium is the lead overseer of Euroclear Bank and the Bank of England acts in this role vis-à-vis Euroclear UK & Ireland (EUI). The Central Bank engages with both of these authorities on oversight matters on the basis of regularly reviewed memoranda of understanding.