Roles of the BSP in Payment and Settlement Systems
The BSP performs the following role in the payments and settlements system:
1) Operator of the real time gross settlement system known as PhilPaSS
The BSP, through its Payments and Settlements Office (PSO), serves as the payment system operator responsible for the operation and maintenance of PhilPaSS and its critical components. It ensures that the operation of PhilPaSS is continuous, safe and efficient so that time-critical payments are completed as expected to facilitate and enhance economic processes, manage risks, and absorb shocks in order to promote financial stability.
2. Provider of credit facilities to banks as a lender of last resort
As payment systems affect the daily demand for liquidity of banks/financial institutions and may therefore affect the level of money market interest rates, the BSP, as a lender of last resort, provides the following liquidity tools to PhilPaSS participants:
- Intraday Liquidity Facility (ILF) – a fully collateralized facility established to maintain the smooth and efficient operation of the payments system in order to avoid interbank payments gridlock in the settlement process within PhilPaSS business hours.
- Overdraft Credit Line (OCL) – another collateralized facility which aims to assist bank experiencing unexpected or higher than usual volume of inward check transactions. The governing policies and procedures are provided under BSP Circular 681 in order to provide additional liquidity for banks encountering liquidity problems due to check clearing losses as well as protect the BSP against settlement exposures.
3. Overseer of the payments and settlements system
The BSP, through its Core Information Technology Sub-Group of the Supervision and Examination Sector conducts information technology (IT) supervision and examination of banks and non-bank financial institutions (FIs) and the payments systems. Its assessments of systems focus on determining the adequacy of IT management and operational controls over data integrity and confidentiality, and attendant risk exposures.
4. User of its own RTGS system
The BSP, through its different departments, also make use of the payments and settlements system for the settlement of its own transactions with its stakeholders, such as:
- The automated collection and settlement of Supervision and Examination Sector annual supervisory fees;
- Online processing of eRediscounting loan proceeds and collection of banks’ maturing loans with Department of Loans and Credit;
- Processing/posting of banks’ cash deposit and withdrawal transactions with Cash Department;
- Investment/maturities of funds placed by the Provident Fund Office; and
- Trading transactions as well as payments of maturing RRP/SDA placements with Treasury Department
5) Initiate changes/reforms for the payments system
The BSP, through its Payments and Settlements Steering Committee (PSSCOM), initiate the conduct of studies/research relating to payments system to ensure that it grows and matures in accordance with the global standards.