The BSP adheres closely to the Core Principles for systemically important payments systems in the design and operation of the PhilPaSS. The report on the Core Principles was published in January 2001 by the Committee on Payment and Settlement System. The report was addressed to all central banks, other interested public sector owners and operators of payment systems. The report explicitly states that the safety and efficiency of payment systems are public policy objectives that should be pursued by central banks.
Core Principles for systemically important payments systems |
I. |
The system should have a well-founded legal basis. |
II. |
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 in it. |
III. |
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. |
IV. |
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. |
V. |
A system in which multilateral netting takes place should, at a minimum, be capable of ensuring timely completion of daily settlements in the event of an inability to settle by the participant with the largest settlement obligation. |
VI. |
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. |
VII. |
The system should ensure a high degree of security and operational reliability and should have contingency arrangements for timely completion of daily processing. |
VIII. |
The system should provide a means of making payments which is practical for its users and efficient for the economy. |
IX. |
The system should have objective and publicly disclosed criteria for participation, which permit fair and open access. |
X. |
The system’s governance arrangements should be effective, accountable and transparent. |
