• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Global Trends in Large Value Payment Systems
 

Global Trends in Large Value Payment Systems

on

  • 3,044 views

We discuss 10 main trends in the settlement of large-value interbank payments; ...

We discuss 10 main trends in the settlement of large-value interbank payments;
1. Diffusion of Real Time Gross Settlement
2. Take Off of Hybrid Systems
3. Emergence of Cross Border and Offshore Payment Systems
4. The Rise of CLS
5. Increasing Settlement Values and Volumes
6. Shrinking Average Payment Size
7. Falling Number of System Participants
8. Extended Operating Hours
9. Declining Transaction Fess
10. Adoption of Common Standards for LVPS

Statistics

Views

Total Views
3,044
Views on SlideShare
2,732
Embed Views
312

Actions

Likes
1
Downloads
79
Comments
1

8 Embeds 312

http://www.soramaki.net 259
http://www.slideshare.net 23
http://soramaki.net 22
http://www.slashdocs.com 3
http://www.koondada.com 2
http://localhost 1
http://jujo00obo2o234ungd3t8qjfcjrs3o6k-a-sites-opensocial.googleusercontent.com 1
http://188.165.210.154 1
More...

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel

11 of 1 previous next

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • CLS Bank maintains links with the relevant central banks’ Real Time Gross Settlement (RTGS) systems This will enable it to provide global settlement with a similar degree of finality and certainty for CLS-settled trades as is provided through a domestic Central Bank RTGS. Each Settlement Member holds a multi currency account with CLS Bank, through which payments are made to and from CLS Bank.  
  • At the heart of CLS Bank’s unique settlement process is the five-hour operating “window”, during which the participating currency Central Bank RTGS systems have overlapping operating times – for the first time ever – that enables cross-currency transactions to be settled and funded on the same day. In this window eligible settlement instructions for a particular date are settled and funds are requested to be paid in and are paid out by CLS Bank to complete the projected settlement-funding obligation.
  • This slide show the yearly value transferred over Fedwire since 1985. The value has grown from $100 trillion to almost $500 trillion. Measured relative to GDP the value has grown from 25 times to around 40 times GDP.

Global Trends in Large Value Payment Systems Global Trends in Large Value Payment Systems Presentation Transcript

  • February 6, 2009 OENB, Wien Global Trends in Large Value Payment System Morten L. Bech 1 , Christine Preisig 1 and Kimmo Soram ä ki 2 1 Money and Payment Studies, FRBNY 2 Helsinki Univ. of Technology, www.soramaki.net The views expressed in this presentation do not necessarily reflect those of the European Central Bank the Federal Reserve Bank of New York or the Federal Reserve System.
  • Ten Trends
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore Payment Systems
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fess
    • 10. Adoption of Common Standards for LVPS
  • Key Drivers
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fess
    • 10. Adoption of Common Standards for LVPS
    Technological change Structural Changes in Banking Changes in Central Bank Policies
  • Trend #1
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore Payment Systems
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fees
    • 10. Adoption of Common Standards for LVPS
  • The Diffusion of RTGS
    • Historically, Deferred Net Settlement
    • Values   Concern about settlement risk (unwinding)  Real Time Gross Settlement (RTGS)
    • RTGS  Liquidity needs   Hybrid system: elements of DNS and RTGS
  • RTGS 2006
  • S-curve
  • Trend #2
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore Payment Systems
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fees
    • 10. Adoption of Common Standards for LVPS
  • Mixing RTGS and Netting Features
    • DNS systems adopt RTGS features -> NewCHIPS, PNS
    • RTGS systems adopt DNS features -> RTGS plus , T2
    Liquidity available/required Lower bound Upper bound Delay DNS (eod) Pure RTGS
  • DNS, RTGS & Hybrid We consider the following systems: Fedwire, CHIPS, CHAPS, SIC, TARGET, MEPS, K-RIX, LVTS, PNS, Euro1 and HKD CHATS. DNS in 1999: Euro1 and BoJ-NET. Hybrids in 1999: PNS and LVTS. RTGS. Hybrids in 2005: PNS, LVTS, CHIPS and RTGSplus. The value for RTGSplus was subtracted from the value of TARGET in computing the value settled via RTGS.
  • Trend #3
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore Payment Systems
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fees
    • 10. Adoption of Common Standards for LVPS
  • A LVPS Taxonomy CLS, Rentas-CHATS link Euro CHAPS TARGET, EURO1 Cross Border Euro-SIC SIC Remote HKD, USD, EUR CHATS (PvP in CHATS) USD CHATS EUR CHATS Fedwire, CHIPS CHAPS, LVTS , RIX, PNS, BoJNET Domestic Participant Type Multiple (PvP in FX settlement) Foreign Local Settlement Currencies
  • Cross Border Flows in TARGET 1999 - 2002
  • Offshore USD
  • Offshore EUR
  • Trend #4
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore Payment Systems
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fees
    • 10. Adoption of Common Standards for LVPS
  • CLS Bank is a multicurrency bank Has remote access to accounts with 15 Central Banks Holds a multi currency account for each Settlement Member South African Reserve Bank Hong Kong Monetary Authority Reserve Bank of New Zealand Bank of Korea Reserve Bank of Australia European Central Bank Swiss National Bank US Federal Reserve Bank of Japan Bank of England Bank of Canada Monetary Authority of Singapore Danmarks Nationalbank Norges Bank Sveriges Riksbank
  • Overlapping RTGS systems Asia/Pacific Europe North America Europe
  • The Rise of CLS
  • CPSS surveys on FX settlement risk 100% 100% 3,821 Total 5% 203 Other settlement methods 8% 15% 304 Bilateral netting 32% 85% 1,224 Traditional correspondent banking 55% 0% 2,091 CLS (PvP) 2006 (% of total Value) 1998 (% of total Value) Value Settlement Method
  • Trend #5
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore Payment Systems
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fees
    • 10. Adoption of Common Standards for LVPS
  • Slower Growth after 2000
  • US flows at par with GDP
  • Share of systems
  • Number of Transactions
  • Trend #6
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore Payment Systems
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fees
    • 10. Adoption of Common Standards for LVPS
  • Average Payment
  • Change in Average Payment Size
  • Trend #7
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore Payment Systems
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fees
    • 10. Adoption of Common Standards for LVPS
  • Number of Participants
  • Trend #8
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore Payment Systems
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fees
    • 10. Adoption of Common Standards for LVPS
  • LVPS Business Hours
  • LVPS Business Hours
  • Trend #9
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore Payment Systems
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fees
    • 10. Adoption of Common Standards for LVPS
  • LVPS Pricing Schedules
  • Fedwire vs. CHIPS
  • Trend #10
    • 1. Diffusion of Real Time Gross Settlement
    • 2. Take Off of Hybrid Systems
    • 3. Emergence of Cross Border and Offshore Payment Systems
    • 4. The Rise of CLS
    • 5. Increasing Settlement Values and Volumes
    • 6. Shrinking Average Payment Size
    • 7. Falling Number of System Participants
    • 8. Extended Operating Hours
    • 9. Declining Transaction Fees
    • 10. Adoption of Common Standards for LVPS
  • Core Principles
  • The Future
    • 1. Diffusion of RTGS: Well under way – 93/174 CBs
    • 2. Age of Hybrids: More to come, investment cycle
    • 3. Cross Border and Offshore: Unique events, niche players
    • 4. The Rise of CLS: Growing importance, Share ~ 50%, New markets
    • 5. Increasing Values and Volumes: At the rate of GDP
    • 6. Smaller Large Value Payments: Fees   RTGS more attractive
    • 7. Diminishing Membership: Consolidation is continuing
    • 8. Approaching 24/7 payments: True 24/7 ?
    • 9. Declining Transaction Fess: ITC cost 
    • 10. The Triumph of Common Standards: White collar welfare
  • A New Path?
    • Check clearing, …
    • Deferred Net Settlement
    • Real Time Gross Settlement
    • Hybrid System
    Traditional Path Canada Emerging Markets