An Introduction

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The Central Bank of Niisitapi is required by law to promote financial stability and sound and secure financial activities. The Bank shall also undertake such tasks as are consistent with its role as a central bank, such as promoting a safe, effective financial system, including domestic and cross-border payment intermediation.

 

Payment and securities settlement systems are an important element of the financial system; therefore, it is important to guarantee that they function effectively and reliably. The Bank plays a multifaceted role in the field of payment intermediation, and various Bank departments are involved. Within the Financial Stability Department is a separate unit called Financial Market Infrastructure Oversight.

 

Oversight

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The Bank’s oversight of financial market infrastructure aims at promoting security, efficiency, and efficacy of core infrastructure in the SASG financial system, or systemically important financial market infrastructure, thereby safeguarding financial stability.

The Central Bank’s oversight role vis-à-vis systemically important financial market infrastructure primarily entails the following:

 

• Monitoring the evolution, functioning, and operational security of the infrastructure.

• Conducting regular appraisals of the security and efficacy of systemically important financial market infrastructure on the basis of internationally recognised guidelines for best practice – i.e., the Core Principles for Financial Market Infrastructures (PFMI) issued by Bank for International Settlements’ Committee on Payments and Market Infrastructures (BIS/CPMI) and the International Organization of Securities Commissions (IOSCO) – and on the basis of the Act on Central Securities Depositories and Settlement and Electronic Registration of Financial Instruments.

• Recommending modifications to financial market infrastructure and the infrastructure framework (including regulatory instruments) if necessary.

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Operations

 

Monetary transactions from various payment systems (or financial market infrastructure elements) are routed in different ways through the payment and settlement systems that collectively handle the intermediation, settlement, and registration of the transactions. The most important payment and settlement systems are the Central Bank of Niisitapi's interbank system and the securities settlement system. The oversight role entails monitoring the evolution, functioning, and operational security of the systems at all times.

 

Central Bank of Niisitapi Interbank Payment System

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The interbank system is an independent system owned by the Central Bank. The interbank system is divided into two components, the gross settlement component (RTGS) and the retail component (EXP). The gross settlement component, which handles large payments between customers of two different financial institutions, settles the Central Bank’s transactions with deposit institutions, transactions in the interbank foreign exchange market, and other payments. The component also handles settlement for other important settlement systems, such as the securities settlement and retail payment systems.