Environmental Issues Influencing the Reform: the Constraints. Legal and Regulatory Framework . Maria Chiara Malaguti. Is « The Payments System » a legal concept?. « Payment » as execution of a (monetary) obligation Cash, bank money, ….
Environmental Issues Influencing the Reform: the Constraints
Legal and Regulatory Framework
Maria Chiara Malaguti
«Payment» as execution of a (monetary) obligation
«Payment instrument» as the vehicle to execute the tranfer of money
«Payment system» as the set of arrangements to provide the service of executing payment operations by an intermediary
Often the only recognized
Each payment instrument
has special features:
(by agreement: agency)
Mandate to pay
Operator to operator
Finality of payment by fiduciary money and circulation of instruments (as cheques)
Bank to client
Agency relation and limits on mandate to pay/receive payment; transparency
Order to buy
CCP (if any)
Cash transfer into Central Bank money
Bilateral netting and legal «compensation»
Bilateral netting and «current accounts»
Mutuality and bilateralism: «mutuality» if set-off on behalf of clients?
Multilateral netting and legal compensation
Lack of bilateralism and mutuality
Solution: netting by novation
liable towards each party
instead of counterparty?
Final settlement by Central Bank
On the single
On the system
Banking or non-banking activity?
Institutional or functional approach?
Choice of providers
Centralised risk management
Reduction of systemic risk
Leave the market free to consolidate, but:
Fair and open access
Sufficient pressure for innovation