the eurosystem, the dutch payment system and the macedonian payment system
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De Nederlandsche Bank. The Eurosystem, the Dutch payment system and the Macedonian payment system Thijs Kettenis and Paul Osse Conference Financial Sector of Macedonia on Payments and Securities Settlement Systems Ohrid 23 June 2008. Contents. - PowerPoint PPT PresentationTRANSCRIPT
De Nederlandsche Bank Eurosysteem
The Eurosystem, the Dutch payment system and the Macedonian payment system
Thijs Kettenis and Paul Osse Conference Financial Sector of Macedonia on Payments and Securities Settlement Systems
Ohrid 23 June 2008
De Nederlandsche Bank
De Nederlandsche Bank Eurosysteem
Contents Objective of the presentation The Dutch payment system
overview roles of DNB large value payments retail payments securities settlement
Payments in the euro area large value payments retail payments payment systems of EBA
Important similarities and differences with the Macedonian payment system
Questions
De Nederlandsche Bank Eurosysteem
Objective presentation
In the first part of the presentations the payment system in the Eurosystem and Dutch system will be highlighted. To support the practicable usability of this information this presentation will show:the main concepts of the EU and the Dutch payments and securities system;
an overview of the important similarities and differences with the Macedonian payment and securities system.
De Nederlandsche Bank Eurosysteem
Overview: infrastructure in the Netherlands
Central bank About 100 banks; 3700 branches 1 Automated Clearing House (Equens) for retail
payments 1 RTGS large value payment system linked to with other
EU central bank payment systems (TARGET2) Securities: trading: Euronext Amsterdam
clearing: LCH.Clearnet, EMCFsettlement: Euroclear Nederland
De Nederlandsche Bank Eurosysteem
Payment Pyramid
Non-bank financial institutions/corporates /
private persons
Bank BankBank BankBank
DNB-TOP(settlement)
Equens(clearing)
De Nederlandsche Bank Eurosysteem
Payments: different roles DNB
Operator - Cash - Large value payment system: TARGET2 - Settlement of cash leg in securities settlement systems
Overseer - Payment systems - Payment products
Catalyst
De Nederlandsche Bank Eurosysteem
TARGET2
Large value payment system:• Large interbank payment transactions
Settlement services retail payments • Securities transactions• Domestic and Cross border (TARGET2)
TARGET2 is real-time gross settlement system (RTGS)
De Nederlandsche Bank Eurosysteem
Retail payments – major players
Equens- processing and clearing of retail payments- EFTPOS-network service
Currence: licensing joint products (brands: PIN, Chipknip, direct debit, inpayment transfer, iDEAL), certification processing
Banks: issuing and acquiring De Nederlandsche Bank: interbank settlement (Others credit card companies, internet payment
service providers, etc.)
De Nederlandsche Bank Eurosysteem
Retail payments instruments
POS payment instruments- banknotes and coins- debit / credit card- electronic purses- cheques (until end 2001)- iDEAL (payment for internet purchases)
Low value remote payment instruments:- credit transfers- direct debit- inpayment transfers
De Nederlandsche Bank Eurosysteem
Payment pyramid Nr of payments 2007 (billion)
Cash
Non cash - retail
Non cash - wholesale
6.7
0.007
4.4
De Nederlandsche Bank Eurosysteem
Payment pyramid Value of payments 2007 (billion)
Cash
Non cash - retail
Non cash - wholesale
60
31,583
5,907
De Nederlandsche Bank Eurosysteem
Statistical data (I)
Share in non-cash retail payments2000 2006
Credit transfers 32% 29% Direct debits 29% 26% Inpayment transfers 9% 4% Debit cards 28% 35% Credit cards 2% 1% E-purse 1% 4%
Share in total number of payment transactions Non-cash 35-45% Cash 55-65% (POS 75-85%)
De Nederlandsche Bank Eurosysteem
Electronic vs. paper in non-cash
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Paper-based
Electronic
De Nederlandsche Bank Eurosysteem
Statistical data (II)End of 2005
Population the Netherlands 16.3 mln
Bank accounts 23.2 mln Payment cards with debit function 17.7 mln Number of ATMs 7,520 Number of EFTPOS terminals 237,308
Bank accounts per inhabitant 1.4 Payment cards per inhabitant 1.1 ATMs per 10,000 inhabitants 4.6 EFTPOS terminals per 10,000 inhabitants 145.3
De Nederlandsche Bank Eurosysteem
Securities settlement
Trade: Euronext Amsterdam (Euronext: merger Dutch, French, Belgian exchanges)
Clearing: LCH.Clearnet, central counterparty for Euronext cash and derivatives markets
Settlement: Euroclear Nederland (national Central Securities Depository, now part of the Euroclear group)
Cash leg of securities settlement (Euronext markets and OTC: at delivery-versus-payment at DNB)
De Nederlandsche Bank Eurosysteem
EURO AREA PAYMENTS LANDSCAPE
De Nederlandsche Bank Eurosysteem
Distribution of systems
De Nederlandsche Bank Eurosysteem
Euro area payment pyramid (1)
De Nederlandsche Bank Eurosysteem
Euro area payment pyramid (2)
De Nederlandsche Bank Eurosysteem
LVPS in the euro area
TARGET: EU-wide reach; RTGSEURO1: EU-wide reach; MNS
PNS: France; hybrid POPS: Finland; bilateral netting
Two systems have recently closed: EAF (Germany) SPI (Spain)
De Nederlandsche Bank Eurosysteem
Average number of transactions (thousand)
De Nederlandsche Bank Eurosysteem
Average daily transaction value (EUR bln)
De Nederlandsche Bank Eurosysteem
Retail systems in the euro area
15 retail payment systems e.g. STEP2 (EU-wide), Equens (NL-DE), SIT (FR)
Cards clearing and settlement mechanisms e.g. MasterCard settlement service, national card schemes
E-money schemes e.g. Kalibra, Proton, Moneo, Geldkarte, Chipknip
De Nederlandsche Bank Eurosysteem
Differences in retail payments systems
Centralised model (e.g. FR, NL)Most retail payments channelled via one payment system
high turnover
Decentralised model (e.g. DE)Multiple channels for retail payments
low turnover
De Nederlandsche Bank Eurosysteem
Payment systems of Euro Banking Association (EBA)
EURO1
STEP1
STEP2
De Nederlandsche Bank Eurosysteem
EURO1 (1)
Basic facts Second largest euro payment system 187.000 trx. daily with turnover of EUR 189 mln
(2006) Multilateral net settlement system Owner/manager: EBA Clearing Company (owned by the banks)
Participants 71 clearing banks (financial criteria apply) 8 pre-funded participants
De Nederlandsche Bank Eurosysteem
EURO1 (2)
Payment processingSOS = Single Obligation StructureRecalculation of the participant’s single
position after each paymentUnwinding not allowed
SettlementAt the end of the day in TARGETVia settlement account with ECB
De Nederlandsche Bank Eurosysteem
EURO1 (3)
Protected net settlement systemLimit system
Bilateral and multilateral limits Sender and receiver limits Maximum limit: EUR 1 billion
Liquidity pool held at the ECB to cover the single largest possible position
Loss-sharing agreement for clearing banks
De Nederlandsche Bank Eurosysteem
STEP2 (1)
Basic facts ACH (PEACH) – reach ability across euro area 360.000 trx. daily, turnover EUR 1.4 billion (2006) Owner/manager: EBA Clearing Company
Participants 107 direct participants EURO1/STEP1 banks of prefund-participants >1000 indirect participants
De Nederlandsche Bank Eurosysteem
STEP2 (2)
Payments processing Submission of payments in batches on D-1 STEP2 mechanism:
Resorting of payments by recipient bank Production of output files
Settlement Gross settlement in the morning in EURO1 Payments are returned to sender if not settled Settlement in TARGET2 under preparation
De Nederlandsche Bank Eurosysteem
Overview similarities/differences
Macedonia Netherlands
Number of inhabitants (2007)
2.055.915 16.372.715
GDP/capita (USD,2007)
3.659 46.261
Surface (sq. km) 25.713 41.528
Banks 29 (18 + 11)
102
De Nederlandsche Bank Eurosysteem
Overview similarities/differences
Macedonia Netherlands
Number staff NCB Circa 400 Circa 1800Stock Exchange 1 1CSD 1 1
(Euroclear)CCP 1 2
(LG Clearnet, EMCF )
ACH 1(KIBS)
1(CSS of Equens)
De Nederlandsche Bank Eurosysteem
Overview similarities/differences
Macedonia Netherlands
Supervision by NCB on:
Credit institutionsX X
Clearing institutionsX X
Investment firmsX
Money transaction officesX X
Insurance companiesX
Pension fundsX
Trust officesX
De Nederlandsche Bank Eurosysteem
Overview similarities/differences
Macedonia NetherlandsLegal basis payment operations
Yes No
Functions NCB
Payment operationsX X
SupervisionX X
Separate supervisory authority for the supervision on securities institutions
X(MSEC)
X(AFM)
De Nederlandsche Bank Eurosysteem
Questions