The Banque de France published its 2009 report on the oversight of means of payment and transfer systems
Introduction
The Banque de France published its first report on the oversight of means of payment and transfer systems in 2006. This report provides an account of the Banque de France’s performance of these tasks in 2007 and 2008.
Under the law (Article L141-4 of the French Monetary and Financial Code) and under the terms of the Treaty on European Union, the Banque de France has the threefold mission of:
- Ensuring the security of non-cash means of payment and the relevance of the standards applicable to them;
- Ensuring the smooth operation and security of payment systems
- Ensuring the security of systems for the clearing, settlement and delivery of financial instruments.
The first chapter of the report analyses the main developments affecting the Banque de France’s exercise of its oversight during the two years under review. The second chapter focuses on evaluating and monitoring the security and efficiency of transfer systems and means of payment in 2007 and 2008.
Overview
Oversight is at the heart of a central bank’s tasks. The smooth operation of transfer systems is key to financial stability, especially in view of the value of daily transactions processed in France through large-value payment systems (amounting to a daily average of roughly EUR 400 billion, i.e. over 20% of annual GDP). Furthermore, the security of cashless means of payment fosters users’ confidence in their currency, in particular as the use of cashless means of payment is extremely widespread in France (248 payments per inhabitant in 2008, i.e. one of the highest averages in Europe).
The concerned period was marked by the further European integration of means of payment and transfer systems, with the start of the implementation of the Single Euro Payments Area (SEPA) and the launch of new pan-European exchange platforms which have replaced the former systems used on the Paris financial market. These developments contribute to European Union financial integration. took place successfully against a backdrop of the financial crisis, which posed several major challenges for exchange systems.
The exchange systems functioned well in spite of a hectic environment characterized by a one-off increase in volumes traded, strong bank liquidity constraints and the failure of a number of non-resident institutions, which had taken part in many systems in different countries. The financial crisis brought to light the significance of central counterparty clearing houses for Over The Counter (OTC) products, especially credit derivatives. In its decisions of 18 December 2008 and 16 July 2009, the European Central Bank (ECB) Governing Council confirmed that there was a need for at least one central counterparty clearing house for OTC credit derivatives in the euro area. It also stressed that the Eurosystem would closely monitor the use of such infrastructures over the following months.
As regards means of payment, the SEPA project entered its operational phase and a harmonised legal framework was set up by the Payment Services Directive.
These developments will result, in all European countries concerned, in the replacement of current national means of payment by new harmonised means of payment (credit transfers, direct debits and card payments), which will be used under the same conditions across the euro area. This change has required setting up a harmonised Eurosystem oversight framework, which now covers the oversight of means of payment conducted by the Banque de France.
The Banque de France published its first report on the oversight of means of payment and transfer systems in 2006. This report provides an account of the Banque de France’s performance of these tasks in 2007 and 2008.
Under the law (Article L141-4 of the French Monetary and Financial Code) and under the terms of the Treaty on European Union, the Banque de France has the threefold mission of:
- Ensuring the security of non-cash means of payment and the relevance of the standards applicable to them;
- Ensuring the smooth operation and security of payment systems
- Ensuring the security of systems for the clearing, settlement and delivery of financial instruments.
The first chapter of the report analyses the main developments affecting the Banque de France’s exercise of its oversight during the two years under review. The second chapter focuses on evaluating and monitoring the security and efficiency of transfer systems and means of payment in 2007 and 2008.
Overview
Oversight is at the heart of a central bank’s tasks. The smooth operation of transfer systems is key to financial stability, especially in view of the value of daily transactions processed in France through large-value payment systems (amounting to a daily average of roughly EUR 400 billion, i.e. over 20% of annual GDP). Furthermore, the security of cashless means of payment fosters users’ confidence in their currency, in particular as the use of cashless means of payment is extremely widespread in France (248 payments per inhabitant in 2008, i.e. one of the highest averages in Europe).
The concerned period was marked by the further European integration of means of payment and transfer systems, with the start of the implementation of the Single Euro Payments Area (SEPA) and the launch of new pan-European exchange platforms which have replaced the former systems used on the Paris financial market. These developments contribute to European Union financial integration. took place successfully against a backdrop of the financial crisis, which posed several major challenges for exchange systems.
The exchange systems functioned well in spite of a hectic environment characterized by a one-off increase in volumes traded, strong bank liquidity constraints and the failure of a number of non-resident institutions, which had taken part in many systems in different countries. The financial crisis brought to light the significance of central counterparty clearing houses for Over The Counter (OTC) products, especially credit derivatives. In its decisions of 18 December 2008 and 16 July 2009, the European Central Bank (ECB) Governing Council confirmed that there was a need for at least one central counterparty clearing house for OTC credit derivatives in the euro area. It also stressed that the Eurosystem would closely monitor the use of such infrastructures over the following months.
As regards means of payment, the SEPA project entered its operational phase and a harmonised legal framework was set up by the Payment Services Directive.
These developments will result, in all European countries concerned, in the replacement of current national means of payment by new harmonised means of payment (credit transfers, direct debits and card payments), which will be used under the same conditions across the euro area. This change has required setting up a harmonised Eurosystem oversight framework, which now covers the oversight of means of payment conducted by the Banque de France.