Central bank oversight of payment and settlement systems

Central banks have always had a close interest in the safety and efficiency of payment and settlement systems. One of the principal functions of central banks is to be the guardian of public confidence in money, and this confidence depends crucially on the ability of economic agents to transmit money and financial instruments smoothly and securely through payment and settlement systems. This report explains why and how central banks oversee payment and settlement systems. It looks at the need for oversight, the source of central banks’ responsibilities for oversight, the scope of oversight and the activities that oversight involves. In addition it looks at cooperative oversight, where more than one central bank or other authority has responsibilities for a system. It further provides 10 principles for effective oversight, each with explanatory text.