Global Trends in Large Value Payment Systems
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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
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Global Trends in Large Value Payment Systems
- 1. 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.
- 6. RTGS 2006
- 7. S-curve
- 10. 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.
- 12. 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
- 13. Cross Border Flows in TARGET 1999 - 2002
- 14. Offshore USD
- 15. Offshore EUR
- 17. 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
- 18. Overlapping RTGS systems Asia/Pacific Europe North America Europe
- 19. The Rise of CLS
- 20. 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
- 22. Slower Growth after 2000
- 23. US flows at par with GDP
- 24. Share of systems
- 27. Average Payment
- 28. Change in Average Payment Size
- 38. Core Principles
Editor's Notes
- 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.