int'l funds transfer systems

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INTERNATIONAL FUNDS TRANSFER



CONTENTS

´ SWIFT

´ CHIPS

´

FEDWIRE´ CHAPS

´ TARGET

´ SEPA

´ NOSTRO

´ VOSTRO



SWIFT

´ Society for Worldwide Interbank FinancialTelecommunications (SWIFT)

´ Commercial organisation

´ Neither a bank nor a payment system but amessage carrier

´ operates a network of communications allowing for transmission of financial messages

´ Used by banks, financial institutions´ for money transfers, for opening letters of credit,

netting operations etc



CHIPS (US)

´ Clearing House International Payment Systems

´ is a funds-transfer system

´ transmits and settles payment orders in U.S.

dollars

´ for some of the largest and most active banks inthe world.

´

On an average day, CHIPS transmits and settlesover 330,000 ´payment messagesµ worth anaggregate of $1.45 trillion.



PAYMENT PROCESS

´ Value date

´ Sending participant·s CHIPS identification number

´ Receiving participant·s CHIPS identification number

´

Dollar amount´ Intermediary bank identification

´ Beneficiary·s bank identification

´ Beneficiary identification

´

Originator identification´ Originator·s bank identification

´ Instructing bank identification



FEDWIRE

´ Earlier known as Federal Reserve Wire Network

´ Is Real Time Gross Settlement Funds Transfer

system´ operated by the Federal Reserve Bank

´ enables financial institutions to electronically

transfer funds between its more than 9,289participants (as of March 19, 2009)

´ Works in conjunction with CHIPS



CH APS (UK)

´ Clearing House Automated Payment System(CHAPS)

´ British Company

´ Established in London in 1984

´ Offers same-day Sterling fund transfers

´ Used to offer euro fund transfers

´ Service is now closed.

´ Now a part of TARGET



TARGET

´ Trans-European Automated Real-time GrossSettlement Express Transfer System

´ Central Bank·s large value payment system

´ Interbank payment system for the real-timeprocessing of cross-border transfers throughoutthe European Union

´ Provides backbone of financial system in Euro

´ Implementation tool for the Euro system's singlemonetary policy

´ Replaced by TARGET2 in 2007



TARGET2

´ TARGET2 is the RTGS system for the euro,

offered by the Eurosystem

´

Used for the settlement of central bankoperations, large-value euro interbank transfers

as well as other euro payments.

´ Single RTGS system platform



´ the Banca d·Italia, the Banque de France and

the Deutsche Bundesbank

« jointly provide the single technical infrastructure,

the Single Shared Platform (SSP) of TARGET2 and

operate it on behalf of the Eurosystem



SEPA

´ Single Euro Payments Area (SEPA)

´ allows customers to make

´ non-cash euro payments to any beneficiary´ located anywhere in the euro area

´ using a single bank account and a single set of

payment instruments



AIM OF SEPA

´ to advance European integration with a

competitive and innovative euro area retail

payments market that can bring with it

´ Higher service levels, more efficient products

and cheaper alternatives for making payments.



SEPACONSISTS

´ the single currency,

´ a single set of euro payment instruments ² credittransfers, direct debits and card payments,

´ efficient processing infrastructures for europayments,

´ common technical standards,

´ common business practices,

´ a harmonised legal basis, and´ ongoing development of new customer-oriented

services.



SEPA REQUIRES INTERACTION

BETWEEN

´ European banking industry

´ European clearing and settlement industry

´ Euro area companies´ Public administrations

´ customers



´ All retail payments in euro will become

´domesticµ, and there will no longer be any

differentiation between national and cross-

border payments within the euro area.



´ Nostro

« Accounts held by a domestic bank abroad

´

Vostro« Accounts held by foreign bank with a domestic

bank

int'l funds transfer systems

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