A crucial aspect of the development of a country's domestic banking system and financial markets is the payment system, which is used by enterprises and individuals to discharge obligations incurred in a market economy. Payment systems are the foundations on which a stable and efficient economy can be built. The principal objective of the payment system is to support the country's economy. Moreover, the payment system is one of the first places where financial stress will manifest itself, as firms in financial difficulty fail to meet their payment obligations.
The payment system is the apparatus through which obligations resulting from economic activity are discharged by transfers of monetary value. Obligations can be discharged through the payment system using cash or deposits held in banks. In the case of payments made using bank deposits, it is necessary to use some form of payment instrument, such as a paper or electronic credit or debit payment, to move funds. For a debit payment, such as a check, the receiver of money (the payee) initiates an instruction to the bank holding the deposit of the sender of money (the payer), ordering the paying bank to pay. This is done by presenting a check, which must be honoured by the payer, who is the customer of the paying bank, once the check is authenticated.
For a credit payment, such as a payment order, the party making the payment initiates an instruction to his bank to pay money to the intended receiver by initiating a payment order.
When using deposit money in banks to make payment, the process for discharging an obligation can be divided into two parts. The first part is clearing, the process by which payment information is conveyed between the payer and payee and between the banks holding the accounts of the two parties to the transactions. Once a payment is initiated, clearing should take place quickly and reliably in order to minimize financial risk as funds are being transferred. Commercial banks play an important role as intermediaries in the clearing process because they provide account services to the public.
The second part of the process for discharging an obligation using deposit money in banks is settlement, in which the actual transfer of monetary value associated with the payments is made. Banks play a role in settlement because it is through the accounts held on their books that the transfer of monetary value occurs. Commercial banks settle for the non-bank public and sometimes for other banks with which they have correspondent account relationships.
The central bank, where all commercial banks hold accounts, is often used by commercial banks as the settlement entity for interbank transfers.
Clearing and settling payments can be complex. Therefore, an efficient payment system requires a high degree of cooperation and coordination among banks, which usually occurs through a clearing house. A clearing house is a legal entity, owned and controlled jointly by its member banks. Its primary function is to coordinate the exchange and settlement of payments among its members.
The activities of the clearing house might be limited simply to coordinating the physical exchange of payments among banks, for example, by organizing efficient and speedy transportation of payment documents. Clearing houses may also provide processing services to their members, in which case they may operate fairly large data processing and data communications systems to process payment instructions. Payment systems face a number of risks, like liquidity risk, credit risk, cross-currency settlement risk and systemic risk.
Thus, confidence in a payment system is crucial in a market economy. In the long term each country is likely to need a safe and efficient payments system for households; legislation governing payments; and a sound financial sector, including financially and operationally sound banks.
Words you may need:
crucialadj решающий, критический
to discharge obligationsвыполнять обязательства
payeen получатель платежа
to initiate an instruction(зд.) дать указание
payern плательщик
to honour the checkоплатить чек
payment orderплатежное поручение
conveyv передавать
correspondent accountкорреспондентский счет
systemicadj системный