Bankovní institut vysoká škola
Banking management
The Payment system in selected post-Soviet countries
Bachelor´s degree work
Autor: Gaziza Gabidenova
Banking management, Banking manager
Vedoucí práce: Ing. Marcela Soldánová
Prague June, 2014
Declaration
I declare that I elaborated my bachelor´s degree work independently and I stated all the literature used.
I attest by my signature that the submitted electronic version of the work is identical with its printed version, and I am aware of the fact that the work will be archived in the library of the BIVŠ, and further, made accessible to third persons through the internal database of electronic university works.
In Prague, on 30.06. 2014 Gaziza Gbidenova
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Acknowledgement
I would like to thank all people that have helped and inspired me to write this dissertation. First of all, I owe my deepest gratitude to Ing. Marcela Soldánová, who were kind and patient to me and to thank for support and understanding. Finally I would like to thank my family for believing in me.
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Annotation
The word ―System‖ implies complex of individual segments that are working together, have a common function and complement each other. Each segment is important for the system, because efficiency of their work influence quality. When the segments are working smoothly and efficiently, the system as a whole develops and gives better results. Local and international payment systems, payment instruments, work of Central Banks, work of other financial institutions, inhabitants of the country are segments of payment system. And payment system is an important segment of a country. Efficient working payment system performs the country on the world stage and improves the standard of living in the country.
―Effective payment system‖ is an abstract concept, because what is effective for one country can be defective for another, but the main aim is to reduce costs of exchanging goods and services and to have a good functioning of the interbank and capital markets better.
Key words: payment system, segment, payment instruments, development, comparison.
Anotace
Slovo "systém" znamená komplex jednotlivých segmentů, které pracují společně, mají společnou funkci a vzájemně se doplňují. Každý segment je důležitý pro systém, protože jejicho účinnost má vliv na kvalitu práce. Pokud segmenty pracují hladce a účinně, systém jako celek se vyvíjí a dává lepší výsledky. Lokalí a mezinárodní platební systémy, platební nástroje, práce centrální banky, práce jiných finančních institucí, obyvatelé země jsou segmenty platebního systému. A platební systém je důležitý segment statu. Efektivní pracovní platební systém provádí zemi na světové scéně a zlepšuje životní úroveň v zemi.
"Efektivní platební systém" je abstraktní pojem, protože to, co je efektivní pro jednu zemi může být vadný jiný, ale hlavním cílem je snížení nákladů na výměnu zboží a služeb a dobré fungování mezibankovního a kapitálového trhu lépe .
Klíčová slova: platební systém, segment, platební prostředky, vývoj, srovnání.
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TABLE OF CONTENT Introduction ...... - 7 - 1. PAYMENT SYSTEM IN KAZAKHSTAN, RUSSIA AND LATVIA ...... - 9 - 1.1. Payment system and its characteristics ...... - 9 - 1.1.1. History of payment system ...... - 9 - 1.1.2. Definition of payment system ...... - 10 - 1.1.3. Forms of payment system ...... - 11 - 1.2. Payment system in Kazakhstan ...... - 15 - 1.2.1. Development of payment system in Kazakhstan ...... - 15 - 1.2.2. National payment systems ...... - 17 - 1.2.3. Kazakhstan Interbank Settlement Center ...... - 21 - 1.2.4. National Bank of the Republic of Kazakhstan ...... - 23 - 1.3. Payment system in Russia ...... - 24 - 1.3.1. Development of payment system in Russia ...... - 25 - 1.3.2. National payment systems ...... - 26 - 1.3.3. Moscow Interbank Currency Exchange Group (MICEX Group) ...... - 30 - 1.3.4. The Russian Trading System Clearing Center (RTS)...... - 31 - 1.3.5. Bank of Russia ...... - 32 - 1.4. Payment system in Latvia ...... - 34 - 1.4.1. National payment systems ...... - 34 - 1.4.2. Single Euro Payments Area (SEPA) ...... - 36 - 1.4.3. TARGET2-Securities ...... - 37 - 1.4.4. The Bank of Latvia ...... - 38 - 2. Development and utilization of payment instruments in Kazakhstan, Russia and Latvia ... - 41 - 2.1. Development and utilization of payment instruments in Kazakhstan ...... - 41 - 2.1.1. Cash ...... - 41 - 2.1.2. Payment cards ...... - 42 - 2.2. Development and utilization of payment instruments in Russia ...... - 45 - 2.2.1. Cash ...... - 45 - 2.2.2. Payment cards ...... - 46 - 2.3. Development and utilization of payment instruments in Latvia ...... - 48 - 2.3.1. Cash ...... - 48 - - 5 -
2.3.2. Payment cards ...... - 49 - 3. Comparison of mentioned systems ...... - 51 - Conclusions ...... - 53 - List of literature ...... - 54 - Abbreviations ...... - 57 -
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INTRODUCTION
Kazakhstan, Russia and Latvia had one payment system for the time of existence of Soviet Union, but now they have different types and levels. I think that the idea of creating such a big union was good. One idea units a lot of people and creates such an international atmosphere. Idea of Soviet Union was to make all the people equal, and stimulate them to work as segment for better common results. But after dissolution each country had its own way.
Kazakhstan was coerced to enter to the Soviet Union, but, as citizen of this post-Soviet country, I can say that it had a good effect on development of the country, improving payment system, economy and financial system as a whole. Kazakhstan is a country with a good basis. Rich natural resources (99 elements of periodic table), is an important factor. It helps to produce variety of products inside the country, and to trade on international area. Also a positive factor is the location of the country, in neighborhood with China, country with huge human resources and rapid growing economy, with Russia, the biggest country in the world with fast growing economy. First step in creating own payment system, was creation of National Bank and establishing commercial banks, that were forbidden in time of Soviet Union. National Bank of Kazakhstan plays a big role for country, supports and develops payment systems. Also monitors work of commercial banks, which are working with population. Institution that helps National Bank to perform its activities in payment system is Kazakhstan Interbank Settlement Centre. This institution provides Settlements of national payment systems for real-time gross settlements and retail payments. Population of the country is taking part in the system through payment instruments, which are considered to be an important segment of payment system.
Russia is one of the strongest post-Soviet countries, having rich natural resources and authority on international scene. It is the biggest country in the world, which makes word ―system‖ more important for this country. Despite big territory and having nine time zones Russia manages country well. Bank of Russia is the central bank of the country. And it is a major body of the payment system. It tries to make payment system of the country more efficient. Payment system of Russia centralized and Bank of Russia is on the head of the system. For some instances it is easier to rule then. The growth of payment instruments’
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Latvia was the most developed country for time of Soviet Union, but after dissolution lost its erstwhile positions. First steps of independent Latvia were not successful. Latvia tried to make deindustrialization of the country, which lead to higher rate of unemployment and to economic downturn. Latvia joined Eurozone in the beginning of 2014.Changeover is processing up to today. And mostly prognoses are good. For payment system it had a good effect. Euro payment systems and processing centers are more experienced, faster and cheaper.
These countries are different, and comparison of the payment systems is notable for different levels of development and different factors that suspend it. Level of development can be monitored through payment instruments.
The aim of my work is to introduce other people information about payment systems in Kazakhstan, Russia and Latvia .To study aspects of payment systems of those countries and to compare development and level.
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1. PAYMENT SYSTEM IN KAZAKHSTAN,
RUSSIA AND LATVIA
1.1. PAYMENT SYSTEM AND ITS CHARACTERISTICS
In our everyday activities we are not mentioning some processes that are so mechanical for us. One of them is payment, which is done every day and everywhere: in café, shop, bank, transport etc. We are taking part in one big system called ―Payment system‖ and it takes an important role for people and countries. A lot of transactions made every day worldwide. Well - designed payment system gives proper functioning of markets and economy as a whole. There are different models for different countries, and some of them are more effective than another.
1.1.1. HISTORY OF PAYMENT SYSTEM
Nowadays in age of technologies our payments are done so easily: just paying by cash, cards, and cheques even through internet. But it was a long way to get to such age. With the appearance of mankind there was need to evaluate things you have in order to get things you need, so called barter. But it was not an easy job to evaluate equally and existed problems with transportation. It was a strong need in some commodity that can be exchangeable for an easier way to purchase. Before getting banknotes and coins as commodity, there existed a lot of another1:
9000-6000 BC – animals are the oldest form of currency, commonly used: camels, cows and sheep. 3000 BC- grain is used as currency in Mesopotamia, later it was evolved into an equivalent to silver, bronze and copper. 1200 BC – shell money, first used in China. 1000-600 BC- coins made from base metals first appeared in China.
1NOVA: The History of Money, URL:http://www.pbs.org/wgbh/nova/ancient/history-money.html - 9 -
700 BC- gold and silver coins first used in ancient Lydia and coastal Greek cities, with profiles of gods and emperors. 118 BC - one-foot-square peace of deerskin- ―leather money‖. 806 AD - paper money, first introduced by China (widely accepted in 960 AD). The increasing use of bank notes and paper money as currency allowed banks to take up the practice of fractional reserve banking and begin loaning out money. Credit became available to people who could assure banks they were going to be able to provide a timely repayment of the loan, with interest, of course. Goldsmiths were some of the first to embrace this idea; using a portion of the reserves they were holding in order to become creditors and make money off of investments. The first mention of credit cards comes from the 1887 novel ―Looking Backward‖2, although description is more about card that would be considered a debit card. Although there were some early forms of payment that could definitely be thought of as a precursor, but modern day credit card didn't really appear until the 1950s. Diners Club was the first general purpose charge card, but it required that people pay the entire balance at the end of each statement period. The idea of credit cards as revolving debt didn't really start to take off until the launch of the cards that would eventually become Visa and MasterCard in the mid 1960s.
1.1.2. DEFINITION OF PAYMENT SYSTEM
In view of the payment system, it is important to define concepts such as the payment and the system.
Payment - performance of a money obligation, using cash or without, by utilization of money transfer or the payment document containing financial obligation or order for money transfer.
System - is a set of interacting components forming an integrated whole.
From these concepts the payment system can be defined as: a system, including set of interacting parts, which is trying to perform payments without barriers. According to Bruce J. Summers: ―The payment system is an operational network - governed by laws, rules and standards - that links bank accounts and provides the functionality for monetary exchange
2 ―Looking Backward‖ - 2000-1887 is a utopian science fiction novel by Edward Bellamy, a lawyer and writer from Chicopee Falls, Massachusetts. It was first published in 1888. According to Erich Fromm, Looking Backward is "one of the most remarkable books ever published in America" - 10 - using bank deposits3”, but according to World Bank: ―it is the infrastructure (consisting of institutions, instruments, rules, procedures, standards, and technical means) established in effect the transfer of monetary value between parties discharging mutual obligations. Its technical efficiency determines the efficiency with which transaction money is used in the economy, and risk associated with its use4.‖ But to say simply it's our everyday transactions: buying in shops, using credit and debit cards, checks, bank transfer etc. Role of payment system and financial institutions grew in 80-90s – time of deregulation of financial markets and ―financialization‖ of economy. Financial institutions got dominant position with leading role of banks with share more than 75-80%.
1.1.3. FORMS OF PAYMENT SYSTEM
A lot of transactions made every day worldwide. Well - designed payment system gives proper functioning of markets and economy as a whole. There are different models for different countries, and some of them are more effective than another. ―Effective payment system‖ is an abstract concept, because what is effective for one country can be defective for another, but the main aim is to reduce costs of exchanging goods and services and to get functioning of the interbank, money, and capital markets better. Type of payment system depends on type of country, population, degree of development, location, currency etc. But there are some classifications of payments that performed in every payment system.5
Due to method of payment Cash payments
Cash payments made using banknotes and coins. It is face to face transaction that can be done between individuals or between individual and merchant. A cash payment is an immediate and final transfer of value, and the recipient can immediately use the cash received for another payments. In most countries, legislation or regulation requires that banknotes and coins be
3 Bruce J. Summers .Payment Systems: Design, Governance and Oversight , Central Banking Publications Ltd, London: 2012, p.3
4 Biago Bossone and Massimo Cirasino. The Oversight of the Payment Systems: A Framework for the Development and Governance of Payment Systems in Emerging Economies , The World Bank, July 2001, p.7
5SCHLOSSBERGER, Otakar. Platební služby. Part 1.Prague: Management Press, 2012. ISBN 978-80-7261- 238-3. - 11 - accepted as payment for all types of transaction. This confirms the status of the banknotes and coins as legal tender.
Non-cash payments
Non-cash payments, involve the transfer of funds between accounts. A non-cash payment instrument is therefore the means by which a payer gives its bank authorization for funds to be transferred or by which a payee gives its bank instructions for funds to be collected from a payer. The accounts of the two parties may be held with a single bank or with different banks.
The most common non-cash payment instruments6:
Credit transfer – instructions sent by a payer to its bank requesting a definite amount of funds be transferred to the account of a payee. Direct debit- is payment instruments authorizing the debiting of the payer’s bank account. It is initiated by the payee on the basis of authorization given by the payer. The authorization by which the payers agree to have its account debited in a direct debit transaction is called a ―mandate‖. The payee or the payer’s bank may have an obligation to notify the payer before debiting the account. Direct debits are generally submitted and processed in electronic form. Payment cards- are access devices that can be used to pay for goods and services – either at the point of sale (POS) or to withdraw money at automated teller machines (ATMs). The most common types of payment cards are: - Debit cards allow cardholders to charge purchases or ATM withdrawals directly and individually to his account. When a cardholder uses a debit card, the amount is typically debited from the account either immediately or within a few days and there is no postponement of payment. - Credit cards provide cardholders with a credit facility and the possibility of delaying payment. The size and duration of the credit facility is the subject of an agreement between the cardholder and the card issuer. Generally, when the credit facility is used, the outstanding amount can be either settled by the end of a specified period, or settled in part, with the remaining balance extended as credit and subject to interest payments.
6Tom Kokkola. The payment system: payments, securities and derivatives, and the role of the Eurosystem, European Central Bank, Frankfurt an Main: September, 2010, ISBN 978-928990632-6, p 28. - 12 -
- Delayed debit cards (deferred debit cards or charge cards) give opportunity the cardholder to postpone payment, but the amount has to be settled in full at the end of a period.
Cheques - it is a written order from one party (drawer) to second (drawee) requiring the drawee to pay certain amount on demand of drawer or third party. They are for payers, because there is often a delay between the drawing of the cheque and debiting from bank's account. However, there is potential problem of a drawer creditworthiness , since at the time of acceptance of the payee has no means of verifying that the payer has sufficient funds in its bank account to cover the cheque A money order is a payment product based on the credit transfer and is used to transfer money remotely. It is used when the payer or payee does not have a current account in a financial institution. It can be used for both domestic and foreign currency payments. In some systems, a money order is a paper-based instrument, while in others it is transmitted and processed as an electronic credit transfer. The money can be paid in cash, but the money order is cleared and settled electronically. If the drawee is a postal institution, it is called a ―postal order‖. Travellers’ cheques are prepaid paper-based products issued in specific denominations for general-purpose: in business and personal travel. They do not specify any particular payee, are non-transferable once signed and can be converted into cash only by their owner. They are generally accepted by banks, with many large retailers and hotels (and some restaurants). A bank draft (―cashier’s cheque‖ or ―teller’s cheque‖) is a cheque drawn by a bank on itself. Bank drafts may be written by a bank for its own purposes or may be purchased by a customer and sent to a payee in order to discharge an obligation. Letter of credit is a promise by a bank or other issuer to make a payment to a third party on behalf of a customer in accordance with certain conditions. It is frequently used in international trade to make funds available in a foreign location. Bill of Exchange is a written order from one party (the drawer) to another (the drawee) to pay a certain sum to the drawer (or a third party specified by the drawer) on demand or on a certain date.
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Electronic payments
Electronic payments it is payments for which funds, deposited electronically in the form of electronic money, are transferred between the payer and the payee. Amount of electronic money debited from account of payer and credited to the account of payee scriptural money.
DUE TO TERRITORY
Domestic payments
It is payments between the payer and the payee if the payment service provider of both is located in the same State.
Cross-border payments
Payments are between the payer and the payee, if the payment service provider of the payer and the payee are located in different states, but in European Economic Area.
Foreign payments
Payments are between the payer and the recipient, if the payment service provider of payer and the payee are in different countries.
Due to document Documentary payments
Payments are between the payer and the recipient, when both parties agree for conditions that the transfer of funds is linked to the documents that must accompany the payment
Non-documentary payments
Payments between the payer and the recipient are not accompanied by any documents, so- called ―smooth payments‖.
Due to maturity date Standard payment date
Payments are between the payer and the recipient, an ordinary transfer of funds under pre- agreed conditions.
Express payment date - 14 -
Payments between the payer and the recipient, in which the bank or payment service provider immediately debit funds from current or payment account of the payer and the credit to the payee's payment account at the same day.
Due to financial liability Obligational payments
Payments are between the payer and the recipient, in which the parties agree that a bank or other financial institution may enter into payment process.
Non-Obligational payments
Payments are between the payer and the recipient, when the bank or any other payment service provider of payment transaction only intermediary.
1.2. PAYMENT SYSTEM IN KAZAKHSTAN
Kazakhstan, officially the Republic of Kazakhstan, is democratic state. Kazakh nation is mix of Turkic and Mongol nomad tribes who migrated to the region by the 13th century. In the 18th century it was conquered by Russia and became part of Soviet Union in 1936. Kazakhstan was one of the last countries to declare its independency following dissolution of Soviet Union in year 1991. It is the 9th largest country in the world with territory of 2,727,300 square kilometers and 62nd largest with population nearly 17,160,000 people. Kazakhstan is developing country with GDP per capita $14,391and inflation rate 6.50 for year 2014. The current and only president, from 1991 till today, of Kazakhstan is Nursultan Nazarbayev. The capital is Astana, where it was moved from Almaty in 1997. Official language is Kazakh, but spoken languages are Kazakh and Russian.7
1.2.1. DEVELOPMENT OF PAYMENT SYSTEM IN KAZAKHSTAN
7 Central Intelligence Agency, almanac . The World Factbook ,United States: 2013–14 edition, ISBN 978-5- 9757-0410-8. - 15 -
After declaration of sovereignty and getting into international market relations Kazakhstan had a strong need in structural reforming of the state economy including the financial system. On the first place is situated construction of the new payment system, which would be effective and reliable. The main goals of this reform were acceleration of payment process between banks and clients (in the beginning of 90s payment process took 3-12 days) and wide implantation of different payment instruments, such as checks, payment orders, payment requirements. While constructing of modern payment system Kazakhstan used experience of European Union, CIS and Baltic countries.
The first step of reform in 1991 was transfer of accounts between commercial banks’ branches to correspondent accounts of National Bank of Kazakhstan (NBK).
In 1992 aroused correspondent accounts for national/central banks of CIS countries aimed to implement economic calculations, also were created branches of NBK across the country.
In 1994 first were issued state treasury obligations for Ministry of Finance. In the same year was created the Central Securities Depository Joint-stock Company (non-profit organization).
Meaningful step was establishment of Almaty Clearing House (ACH) in year 1995. In 1996 ACH was reorganized to Kazakhstan Interbank Settlement Centre of the National Bank of Kazakhstan (KISC), which is used nowadays.
Crucial moment for acceleration of interbank transaction was creation of Real Time Gross Settlement System (RTGS) in August, 1996. As a basic Kazakh system of large payments was taken experience of Switzerland, particularly Swiss Interbank Clearing (SIC). In short time large payments system became popular due to electronic communication that not request paper confirmations and allow fast and safe transfer money.
On the 1st of August, 1999 activity of regional clearing houses was stopped and was decided to make clearing system of interbank clearing similar to system of an American automated clearing house, which is well functioning up to today.
In June, 1998 law on payments and money transfer was adopted. It was basic document for regulation payments and money transfer on territory of Kazakhstan.8
8 Department of payment systems of National Bank of Kazakhstan. Oversight of payment systems of Kazakhstan. Almaty: June, 2011, p.4. - 16 -
In order to ensure the use of the Kazakh language in process of payments and money transfers in December 1, 2008 was a transition of payment system to a new code table based on the standard ST RK 1048-2002.
In June 7, 2010 was a transition of the banking and payment systems of Kazakhstan to the new bank account numbers and bank customer's bank identification codes. The basis for the new structure were taken customer's bank account and bank identification code to the international standards ISO 13616: IBAN and ISO 9362: BIC, respectively. Application of widely used in the financial community standards of banking details aimed at improving the identification of banks and their customers in the payment systems of Kazakhstan, automation and acceleration of the processing of domestic and international payments, upholding the principle of STP (straight-through processing of payment).9
1.2.2. NATIONAL PAYMENT SYSTEMS
Currently in Kazakhstan operate two national payment systems: Interbank System of Money Transfer (ISMT) and Interbank Clearing System (ICS). Each payment system has its own characteristics and focused on specific market segments.
Interbank System of Money Transfer (ISMT) is a gross settlement system in real time in the country (RTGS), in which each document is processed individually and money transfer is done on the basis of each payment document. There are 54 direct participants: the National Bank of the Republic of Kazakhstan, State Center of Pension Payments (SCPP), commercial banks, the Stock exchange, Treasury of the Ministry of Finance, Securities Central Depositary and participants of equity market. Each payment system participant is obligated to have a corresponding account in the National Bank. The transfer of money in the system is carried out within the amount of money that the user translated from the correspondent account at the National Bank to a special account of the National Bank system, as well as the amount of money received from other users of ISMT.
9 Department of payment systems of National Bank of Kazakhstan. Oversight of payment systems of Kazakhstan., p.5. - 17 -
System is managed by National Bank, and operator, that provide its functionality is Kazakhstan Interbank Settlement Center. Aim of ISMT is to process the large payments and payments with high priority in the country. Through the system can be carried out credit and debit transfers. It provides settlement of the payment in the national currency (tenge) throughout the trading day. Payments in ISMT are done only electronically. The system operates all week except holidays and weekends. Working day starts at 9 am and closes at 20 pm. However, at the request of the user, the National Bank can prolong operating hours.
ISMT operates as following scheme: Bank of Guarantor (Bank A) sends a message ISMT (in the form of electronic payment order) to transfer money, ISMT checks amount sufficiency on position in KISC, and if it is sufficient makes money transfer and notify the Guarantor Bank (Bank A) about debiting his account and the Beneficiary's Bank (Bank B) about crediting his account. In case of insufficiency payment document is queued. Payment documents in the queue are processed in accordance with the codes of priority. System users have rights to install and change the order of execution of payment documents. They can even revoke a document in a queue. (Figure 1)10
Figure 1. Exchange of electronic messages between participants of ISMT
Source : http://www.nationalbank.kz/?docid=488
10URL: http://www.nationalbank.kz/?docid=488 - 18 -
Aim of the system is to carry out large and important payments in transactions of financial sector: securities, interbank deposits, transfers of own funds of banks and their customers, transactions in foreign currencies and precious metals.
In average daily through ISMT are done 62 265 transactions with value 802 milliard KZT, the peak was 94 927 transactions with value 2 319 milliard KZT. 11
Graph No.1. Statistics on the value of payments (million KZT) in ISMT for 2013-2014
1400000
1200000
1000000
800000 2012 600000 2013 400000 2014 200000
0
Source: http://kisc.kz/english/pay_systems/mspd_stat.html
Interbank Clearing System (ICS) is a clearing system for a large quantity of retail payments in small amounts. Mainly are carried out payments of economic entities to pay for goods and, services, as well as payments to the budget and payments from the budget. Payments are carried out on multilateral basis without preliminary depositing of amounts at the participant’s account. Money transfer finally done through ISMT, because there is no real money in the clearing system. It is possible to send payments through Interbank Clearing System with future value date T +3, and the restriction on the maximum amount of one payment. (up to
11URL: http://kisc.kz/pay_systems/mspd.html - 19 -
KZT 5 million) Documents with future value date are stored in the system till the specified date, after that they are processes in clearing.
To become an ICS participant bank is obliged to sign the agreement with KISC and to have an ISMT account.
New trading day in ICS begins at 16:00. Documents are accepted 24 hours a day, 7 days a week. Payments in the system are not processed individually, but queued also on the principle of FIFO. Clearing members have opportunity to withdraw payment document before the end of the trading day. Payments are settled once a day from 15:00 to 16:00. According to the results net position of each participant is determined. Net debt position of each clearing participant shall not exceed the amount of money in ISMT. In case of insufficiency of money in ISMT, settlement, standing in the line of ICS with low priority, is void. 12
Participants of the system are: The National Bank of the Republic of Kazakhstan, The State Treasury of the Ministry of Finance, Kazpost, commercial banks, State Center of Pension Payments.
In average daily through ISMT are done 80 247 transactions with value 23 milliard KZT, the peak was 163 451transactions with value 32 milliard KZT.
Both systems ISMT and ICS are accessed through the same payment system terminal and banks send payment instructions electronically on SWIFT formats, which are developed and approved by KISC.13
12URL: http://www.nationalbank.kz/?docid=489
13URL: http://kisc.kz/pay_systems/srp.html - 20 -
Graph No.2. Statistics on the value of payments (million KZT) in ICS for 2013-2014
600000
500000
400000
300000 2012 200000 2013 2014 100000
0
Source: http://kisc.kz/english/pay_systems/srp_stat.html
1.2.3. KAZAKHSTAN INTERBANK SETTLEMENT CENTER
Interbank payments are usually realized through ―Kazakhstan Interbank Settlement Center of the National Bank of Kazakhstan‖ (KISC). It is a state enterprise, which acts on the rights of business and independent non-financial institution. The main source of revenues for KISC is fees from clients. The arch-founder and the authorized body is the National Bank of Kazakhstan.
KCIP activities:
interbank payments, money transfers and interbank clearing in accordance with the legislation of the Republic of Kazakhstan; maintenance of efficiency of software, hardware and other equipment to ensure the smooth functioning of KCIP; issues, which connected with security of payment systems, the availability of suitable hardware and software; provision of safe information exchange, and guaranteed procurement of payment systems’ messages;
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implementation of cryptographic protection, use and storage for KCIP users; actions of distribution and authentication of cryptographic keys; arrangement and functioning of the retail payment systems; drafting a strategy of NBK in interbank payments; activity of National Payment Council for further progress of payment systems; maintenance of payments with use of paying cards; studying and analyzing of experience and practice of other countries payment systems etc. The KISC has a lot of activities and plays a significant role for payment systems of Kazakhstan. In order to perform all the activities, KISC has a solid and reliable structure.
Volume of transactions that are done through KISC grows from year to year permanently. For instance average volume of transactions for year 2012 is 11.8 billion and for 2013 is 14.5 billion. The same situation is with value for transactions. For year 2012 average value is 2.3 billion KZT and for year 2013 2.8 billion KZT. It can be stipulated by many reasons and factors. But I think that the main causes are growing inflation and development of payments through banks as such.
As a general rule, efficiently and smoothly functioning payment systems decrease transaction costs in the economy and enhance the stability of the financial system.
Development of payment systems has a tendency to dynamic growth. Average daily through payment systems carried out thousands of payments and hundreds of milliards of KZT. A monthly volume of payments made through payment systems can be compared with annual GDP of the country.
We suppose, that at the level of financial institutions, government agencies, and business entities using payments and money transfers for today are performed by foolproof and high- tech interbank payment systems of Kazakhstan.14
14URL: http://kisc.kz/about/ - 22 -
1.2.4. NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN
The Republic of Kazakhstan has a two-tiered banking system. The National Bank of the Republic of Kazakhstan (NBK) is the head bank of Kazakhstan and presents the first tier and all other banks present second tier, except of Development Bank of Kazakhstan, which has legal status. There are 16 regional branches across the country and head office is located in Almaty. The National Bank of Kazakhstan shall have an authorized capital in an amount not less than 20 billion KZT, which shall belong to the state.
NBK represents the interests of Kazakhstan in the relationships with banks of other countries, international banks and other financial institutions. National Bank must be regulated by Constitution of the Republic of Kazakhstan and report to the President of Kazakhstan within the limits of authority granted by the legislation.
President of the Republic of Kazakhstan Nursultan Nazarbayev shall signify:
nomination of the Chairman of the NBK with the consent of Parliament; appointment of Deputy Chairmen of the NBK, upon being advised with Chairman of the NBK; acceptance of the structure, staff size and wage system; assertion of the Provision on NBK; approval of annual report of the NBK; favor of design of national currency of the Republic of Kazakhstan;15 The National Bank coordinates its activities with Government of the Republic of Kazakhstan and takes into consideration economical politics of the country and tries to assist in its realization.
The main goal of NBK is to provide the stability of prices in Kazakhstan and has following goals:
implementation and elaboration of monetary policy; assure the functioning of payment systems;
15 Law On the National Bank of the Republic of Kazakhstan, Accountability of the National Bank of Kazakhstan, 01.02.2012, Article 3. - 23 -
promotion of financial systems’ stability; implementation of foreign exchange regulation; adjustment of the financial market and other financial institutions; ensure protection of the rights of consumers of financial services; carry out statistics activities; In accordance with tasks, the National Bank with all its territorial branches performs functions, that are specified in the Statement about National Bank, which is ratified by President of Republic of Kazakhstan on December, 2003. 16
National Bank law was enacted on 30 March, 1995. This law states that NBK acts as the central bank of the Republic of Kazakhstan and is amenable for monetary policy and prudential policy. National Bank defines system, order and method of payments and transfers of funds in Kazakhstan, as well as drives operations of payment systems and ensures their fluent functioning. Also NBK controls the security of computers and networks used by banks and protect data of banking system. According to this law, the National Bank is the only issuer of banknotes and coins of Kazakhstan.
According to Article 8 of the Law, all banks are obliged to follow rules of NBK on payments and money transfers. The main aim of NBK and other state bodies is to check the reliability and stability of second-level banks and banking system.
NBK guides ISMT and ICS in cooperation with KISC. Agreements between KISC and its participants are a legitimate basis for these systems. All banks and other financial institutions, supporting correspondent account in NBK, can take part in payment systems
1.3. PAYMENT SYSTEM IN RUSSIA
Russia, officially the Russian Federation, is a federal semi-presidential constitutional republic. It was founded in the 12th century, the Principality of Muscovy. The communists headed by Vladimir Lenin took a power soon and formed the USSR. Dissolution in December 1991 splintered USSR into Russia and 14 independent states. It is the 1st largest country in the world with territory 17,098,242 square kilometers and 10th largest with population nearly 142,470,272 people. GDP per capita is $14,818 and actual inflation rate is 7.60. Current
16URL:http://www.nationalbank.kz/?docid=164 - 24 - president is Vladimir Putin, which was elected again in year 2012. The capital is Moscow and official language is Russian. National currency is Russian Ruble (RUB). 17
1.3.1. DEVELOPMENT OF PAYMENT SYSTEM IN RUSSIA
After the Soviet Union liquidation the Bank of Russia was established as a central bank, the only financial institution responsible for state monetary and foreign exchange adjustment, in issuance of money, setting exchange rate etc.
In years 1991-1992 under the supervision of the Bank of Russia through the commercialization of banks’ filial branches the network of commercial banks in Russia was created. It was forbidden to create commercial banks across the Soviet Union. After the State Bank of USSR dissolution establishment of networks for settlement centers and implementation of computer technologies has began. Central Bank started to buy and sell on foreign market and to publish exchange rates of foreign currencies against ruble.
In December 1992, a single centralized federal treasury system was established, providing cash services for the federal budget.
In years 1992-1995 the Bank of Russia established systems for supervision and inspection of the commercial banks, for foreign exchange regulation and foreign exchange control. Also BoR organized government securities market (GKO) and participate in its operations.
In year 1995 Central Bank decided to stop extending of the loans to the federal budget deficit and started to extend loans more to individuals sector of economy.
After crisis in 1998, there was a restructurization of banking system, in order to increase their liquidity and to improve their work. Insolvent banks were liquidated from the market. Also an important post-crisis step was an implementation of the Agency for Restructuring Credit Institutions (ARCO) and Inter-Agency Coordinating Committee for Banking Sector Development (ICC), with the help of which banking sector has recovered by the year 2001.
17 Central Intelligence Agency, almanac . The World Factbook. - 25 -
In 2003 the Bank of Russia issued the Ordinance ―On Conducting a One-off Survey of Mortgage Lending,‖ which presented data on housing mortgage loans by credit institutions. Also BoR attempted to have more control over activities of banking sector by introducing the international financial reporting standards (IFRS).
1.3.2. NATIONAL PAYMENT SYSTEMS
The Bank of Russia Payment System
The main objective of the BRPS is the implementation of budgetary and monetary policy, settlement of participants’ payments on financial market. The volume of payments is increasing every year. For example, in 2010, 1059 million payments were provided by the BRPS; however, in 2011 it was 1187 million payments. The value of the transactions has grown as well. For year 2010, the value of the transactions was 653 trillion rubles, but in 2011 it has grown to 916 trillion rubles. These years are marked with significant shifts in transactions.
The BRPS is used for both: large-value and small-value payments and there are no limits for the value of individual payments. By law the BRPS is obliged to provide payments free of charge from regional, municipal and federal reserve.
The BRPS has subsystems in various regions. Russia has nine time zones at its territory. Therefore, operating hours are always set in local time. Operating hours are usually from 9 a.m. to 18 p.m.
There are few participants of the BRPS system, as following: the Federal Treasury, credit institutions, Bank of Russia (BоR) and its branches and customers. Each participant has to maintain correspondent account in BoR. Every participant has its own Bank Identification Code Directory (Russia BIC Directory), which gives information about name, location, payment system used, BоR's branch and separate directory gives more information about details, form of participation and payment limits. To become a participant, the two sides usually sign an electronic document exchange agreement. This document is about terms and
- 26 - conditions of participation, information security obligations, term measures and technical requirements.
System is supported by BоR's collective data processing system, which includes access to collective data processing centers, and the electronic settlement transport system. It provides network to support formats of transfer messages of BоR, communication channels, hardware and software to interact with BRPS.
The payment system of the BRPS has different values, rules and schedules of settlements, type of participants, technology, payment instruments, region and duration of transactions:
the systems for intraregional (VER) and for interregional (MER) electronic payments the Banking Electronic Speedy Payment system (BESP) the payment system using letters of advice
VER (intraregional) and MER (interregional) systems
VER and MER systems are parts of the BRPS system. In order to become a participant of these systems, BoR branches are obliged to adhere to the established security and technical standards, while credit institutions are obliged to maintain a bank account at one of the BоR branches.
The main aim of the BoR is to recover costs for the BRPS services. The fees charged for VER and MER systems depend on various factors, like method of payment (electronic or paper- based), type of payment (which system is being used), and duration of the payment. In addition, amount of the fee depends on the time. The fee increases with the duration of the business day (from 20 to 24 rubles).
VER system
The VER system comprises of electronic payments in regional subsystems of the BRPS. The technology is established by BоR and mentioned in agreement with its clients. Payments in Moscow region take a big share of BRPS' payments and regulated by special documentation of BоR.
- 27 -
Payments are executed by batches on a gross basis close to real-time mode, several times a day. The schedules for electronic payments are set by branches of BоR in local time, and in consideration with schedule of the BSRP. VER system settles payment documents as collection orders, payment claims, and payment orders.
In order to start the payment process a payer sends an electronic payment message (EPM) to the KTsОI or a paper-based payment document to the branch of BоR. The message is being checking to ensure that the payment can be settled. In case of fail, the message is withdrawn from processing with explanation of the reason. After the settlement is done, there is a check, whether sufficient funds are on account to settle payment document. When all the verifications and payment are done, the payer is notified that his account was debited, while payee is notified that his account was credited.
MER system
The MER system contains the electronic payments beyond VER systems of different BRPS’ regional subsystems on a decentralized basis. Only one type of payment document – payment order – is settled in the system. Rules, schedule and procedures are established by BоR.
In the MER system, payments are executed on a gross basis with intraday finality, but settlements between regions of different time zones are settled no later than next day (T+1).
There are three steps of the system process of electronic payments. First step is when the payment is settled in VER system by debiting account of the payer. Second step is when the payment is sent to the VER system that services payee. And the final step is about crediting of the account of a payee.
In each regional subsystem, a participant of MER system checks interregional electronic payments and returns the incorrect one. Exchange of messages is supported by MER Transport Center in Moscow.
The Banking Electronic Speedy Payment system (BESP) The Banking Electronic Speedy Payment system is a national real-time gross payment system which functioned on the federal level. The BESP system is bound with the BSRP’s regional subsystems through electronic messages. It was established in 2007.
- 28 -
BоR is controlled the system as well. It created a special center for monitoring and controlling of the BESP. It manages schedule of participation, operations and intraday payment queue.
Participants of the BESP are branches and other divisions that provide settlements of the BоR, credit institutions and their branches, the Federal Treasury and its offices. Participants are divided as special, direct and associated participants.
The branches of BоR, which can influence payments named special participants (SP). Customers of BoR can be categorized as direct or associated participants.
Direct participants (DP) have direct approach. It gives them the opportunity to have an access to the full range of BESP services: setting limits and priorities on payments, possibility to add, remove or adjust payments in the queue, access to data of liquidity for BESP operations and real-time data on settlement of payments. But for being considered as direct participant credit institutions are meeting technical requirements and stringent security. Payments are carried out according to the BESP system time-table, from 9 a.m. to 21 p.m. Moscow time.
Associated participants (AP) have indirect access to the BESP system through BRPS regional subsystems and range of services which they have an ability to use is limited. For becoming an AP a credit institution must be in account with an SP and have electronic messaging link to the BоR. Payments are settled according to schedules of regional subsystems.
Payments in the BESP system are settled just between BESP participants. System is planned to settle payments in real time and on a gross basis, which includes financial market and monetary policy transactions, interbank and budget payments.
Paying between AP and DP can be done using liquidity on their bank accounts at BоR branches. They don't need to open additional correspondent accounts. DP can effect on payments, so they are able to redistribute liquidity across accounts during a day.
Payments between DPs are settled directly. Payer addresses electronic message to the KTsОI, which checks its authenticity, if there is no problems with payer’s account, it is debited and account of payee is credited.
Payments between APs consist of three steps. First step, message is sent, controlled and checked up in the BRPS regional subsystem, then sent to the BESP processing and settlement center. Second step, settlement is performed and confirmation is sent to the BRPS regional
- 29 - subsystem to debit the AP payer’s account, at the same time message is sent to the BRPS regional subsystem to credit the AP payee’s account. And third step payer’s account is debited and payee’s account is credited.
Payment system using letters of advice It is paper-based payments that use postal and telegraphic letters of advice. The system is exerted for paper-based payment instruments that machine can nor read at the BоR. Payments require more than three days to settle the payment, depending on how deep, fast and intensive is the process and how works documents delivery service.
Participants of the system are branches of the BоR and divisions of the National BIC Directory.
Payments are effected during day of BоR branches at the local time. Payment system is supported by the BоR information processing system and local computer systems.
After receiving payment document, format and security are checked by a BоR branch, BоR branch confirms sufficiency of funds on account. After verification payer’s account is debited and payment documents are sent to the BoR branch of payee with set of rules to credit payee’s account.18
1.3.3. MOSCOW INTERBANK CURRENCY EXCHANGE GROUP (MICEX
GROUP)
The group operates the stock, government securities and derivatives markets. Considerable shareholders are the Russian Banks and the BoR. MICEX performs clearing in accоrdance with federal law ―On the securities market‖. Activities of MICEX are supervised by Federal Financial Markets Service (FFMS).
Credit and other financial institutions that have signed a clearing contract with MICEX can be participants of the group.
18 Bank for International Settlements. Red book. Payment, clearing and settlement systems in Russia, 2011. - 30 -
Derivatives market participants must have minimal equity capital 0,1-10 million for credit institutions and 0,1-1 million for other financial institutions. They can be either general clearing participants or direct clearing participants. Direct clear only for themselves and general can also clear on behalf of other trade participants.
MICEX provides Central Counter party (CCP) clearing services for equities of MICEX Index list for bonds with high quality from T+0 to T+3, repo transactions with settlements from T+0 to T+2, futures, including financial and commodities futures, and non-CCP clearing services for MICEX Government Securities Market (GSM), MICEX SE stock market with settlement from T+0 to T+30, repo transactions for up to 180 days, OTC transactions with BoR.
Services with CCP are performed on the precept of open-offer. MICEX measures profit of funds and volume of securities to be presented by each participant assumes the obligations and notifies participants.
National Settlement Depository (NSD) provides settlement of securities in the stock market and GSM, makes transmission of margin on transactions in the derivatives market.
1.3.4. THE RUSSIAN TRADING SYSTEM CLEARING CENTER (RTS)
RTS CC is a subsidiary of RTS Stock Exchange and it acts as a CCP of the markets it operates in. The RTS Group operates with stock and derivatives markets. In the stock market are traded both: stocks and bonds. In the derivatives market are traded options and futures.
Credit and other financial institutions that have signed a clearing contract can be participants of the group. No equity capital requirements are specified.
The center provides clearing services for equities and corporate bonds of Russian issuers on the stock market with settlement T+0 to T+30, and futures on the derivatives market, including commodities and financial futures and options.
Services with CCP are performed on the principle of open-offer. The RTS measures value of funds and volume of securities to be presented by each participant assumes the obligations and notifies participants, if it is need.
- 31 -
The Settlement Depository Company (SDC) provides settlements for securities on The RTS stock market.
1.3.5. BANK OF RUSSIA
Bank of Russia (BoR) is the central bank of Russian Federation. It was founded on July 13, 1990, on the basis of the State Bank of the USSR. Originally it was called the State Bank of the RSFSR. The federal law ―On the Central Bank of the Russian Federation‖ makes the BoR responsible for payments in Russian Federation. BoR establishes rules for payments settlement, issue money and organizes its circulation, effect on payments with legal entities, individuals, foreign states and international organizations. Bank of Russia is the lender for credit institutions and carries out their payments through payment systems. 19
There are Head Office in Moscow, 79 regional branches, 78 head settlement cash centers and 552 settlement cash centers that effectively organize and regulate payments across all the nine time zones of Russia. The BoR provides payment services to:
credit institutions;
legal entities;
state bodies;
local self-governing bodies and their organizations;
state extra-budgetary funds;
military units;
military servicemen;
employees of the BoR;
in some cases individuals;
19 URL: http://www.cbr.ru/Eng/today/?PrtId=bankstatus - 32 -
Payment system in Russia is centralized, and the center is Bank of Russia. It is done in order to identify and avoid payment system risks, evaluate the behavior of participants and of the system as a whole, and to improve.
Figure 2. The structure of the Russian payment system.
Source: http://www.cbr.ru/eng/archive/archive/root_get_blob.aspx?doc_id=9092
The BoR has an exclusive authority of printing money, approving its design and denominations, putting/withdrawing in/from circulation, implementing security measures. The Bank monitors money turnover, analysis changes and do measures with regard to the necessities of economy.
Standards, rules payment instruments, timing for non-cash payments and monitors activities of credit institutions are established by Bank of Russia. Non-cash payments in Russia are settled in national and foreign currency.
All credit institutions in Russian Federation must be licensed by BoR and must have correspondent account in local branch of the BoR. Each credit institution and branch of BoR has a special bank identification code (BIC), which identifies then in the BRPS and used in completing payment documents. Credit institutions must have reserves at accounts, for the goal of maintaining the money supply at a definite level. They can use required reserves as short-term liquidity, they can use from 60% up to 100%. Also the BoR provides secured short-term liquidity by providing intraday and overnight credit on their correspondent
- 33 - accounts. Or BoR provides Lombard loans, loans by non-marketable assets, unsecured loans, liquidity through repo and swap operations etc.
The BoR is the possessor of its payments system, and has a special design of program and infrastructure. The Bank controls, checks and monitors payment system on daily basis.
The BoR has oversight activities over all the institutional components of payment system, and the main focus point is on systemically important payment systems. Oversight is realized through appointments and contacting and calling the representatives of Russian and international payment systems, reports from these payment systems in compliance with the international standards of Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO). Oversight of the BRPS is based on reports of regional branches and various BRPS subsystems.
1.4. PAYMENT SYSTEM IN LATVIA
Latvia, officially the Republic of Latvia, is a parliamentary republic established in 1918. After being part of Soviet Union Latvia declared its independency on May 4, 1990. Latvia is on 124th place with territory 64,589 square kilometers and on 144th place with population 2,165,165 people. Current president is Andris Bērziņš, capital is Riga, and official language is Latvian language. Official currency is euro (EUR).
1.4.1. NATIONAL PAYMENT SYSTEMS
Target 2
Trans-European Automated Real-Time Gross settlement Express Transfer System is a real time euro payments system used by central banks of the European Union states. Together with the European Central Bank Target 2 is implementing the single monetary policy and provision of smooth functioning of euro payments. Three Eurosystem central banks – the Banca d’Italia, the Banque de France and the Deutsche Bundesbank – jointly provide the - 34 - single technical infrastructure, the Single Shared Platform (SSP), of TARGET2 and operate it on behalf of the Eurosystem.
In year 2002 the Governing Council of the ECB replaced Target with Target 2 system, which was considered to increase payment efficiency. The main difference of the system is the single shared technical platform, to ensure equality of all countries of the system.
Target2-Latvija began its activities in November, 2007 and commercial banks, the Treasury, the Bank of Latvia have joined.
System is operating mostly with large-value payments, related to foreign exchange and money market. It is RTGS system and payments are handled individually and provide immediate and final settlement. It is single-platform system, so they can charge lower fees and better cost- efficiency. 20
By the end of 2013 TARGET2-Latvija had 25 participants: 23 credit institutions (including four branches of credit institutions registered in other countries, but registered in Latvia), the Treasury, the Bank of Latvia and recently joined, the Latvian Branch of Svenska Handelsbanken AB.
System processes high-value and urgent EUR-denominated domestic and cross-border electronic credit transfers. Although there are no limits to the value of payments processed, all payments greater than EUR 50,000 must be processed through TARGET2-Latvija. In addition, TARGET2-Latvija effects the final settlement of EUR-denominated payments originating from EKS.
The volume of interbank payments effected through TARGET2-Latvija accounted 19.1 thousand payments and their value 97.4 billion euro in 2013. 21
Electronic Clearing System
Electronic Clearing System (EKS) is the payment system for interbank retail payments for ensuring retail customer credit transfers among the banks of Latvia. The EKS operates as an ACH (automated clearing house) ensuring automated payment processing of electronic
20 URL: http://www.bank.lv/en/payment-and-settlement-systems/target2
21 Latvijas Banka. Payment and securities settlement system oversight.2013, ISBN 9789984-888-36-1. - 35 - payments. EKS is linked with the Deutsche Bundesbank’s Retail Payment System (RPS) SEPA Clearer.
Processing of payments in lats via the EKS stopped after Latvia joined the euro area and were introduced the functionality and the legal framework of processing euro payments. In 2013, the Bank of Latvia introduced additional settlement cycles in order to reduce risks in cross- border settlements.
At the end of 2013 to EKS participated: 23 credit institutions (including five branches, of credit institutions registered in other countries, but registered in Latvia), the Treasury and Bank of Latvia. Some important participants stopped their participation in the EKS after introduction of euro: Swedbank, JSC SEB Banka, the Latvian Branch of Nordea Bank Finland Plc, the Latvian Branch of JSC Danske Bank, the Latvian Branch of Svenska Handelsbanken AB, the Latvian Branch of Pohjola Bank plc.22
1.4.2. SINGLE EURO PAYMENTS AREA (SEPA)
Single Euro Payments Area (SEPA) is an initiative of the European Payments Council, with the support of the European Commission (EC) and European Central Bank, to create an integrated payment infrastructure across Europe, which is part of the wider objective of creating a true single European market. It ensures that payments made in euro across the European countries are rapid, secure and efficient as domestic payments. SEPA enables consumers, businesses and other economic agents to execute both cross-border and domestic payments in euro on the same key terms and conditions and enjoy the same rights and obligations, regardless of their location.
22 Latvijas Banka. Payment and securities settlement system oversight.2013, ISBN 9789984-888-36-1. - 36 -
Figure3. National SEPA Working Group
National SEPA Working Group
Market demand side Market Supply side Consumers: Banks: Latvian Consumer Rights Protection Centre Association of Latvian Commercial Banks Companies: Latvian Merchant Association State JSC"Latvijas Pasts"
Latvian Fooed Retailers Association Small and Medium-Sized Enterprises and CraftsConsultative Committee Payment processing providers: Employers' Confederation of Latvia LTD "First Data Latvia" JSC "OpusCapita"
Public authorities: Ministry of Finance Payment technologies providers: Bank of Latvia Treasury of Latvia Latvian Information and Communications Technology Association Financial and Capital Market Comission SEPA Cards SEPA FrameworkSub- comminication group Expert Meetings
Source: http://www.sepalatvia.lv/sepa -latvia
1.4.3. TARGET2-SECURITIES
In year 2008, the Eurosystem established Target2-Securities, in order to improve cross-border securities settlement. The aim of the project is to improve settlements in euro in all EU member states, by single platform with legal frаmеwоrк. Governing Council of the European Union appointed Target2-Securities Programme Board and is responsible for its implementation. Also national banks of four Member States are operators of the platform: Germany, France, Spain and Italy.
The representatives of the Target2-Securities Latvia National User Group are: Bank of Latvia, Treasury of the Republic of Latvia, Association of Commercial Banks, Financial and Capital
- 37 -
Market Commission, the Latvian Central Depository. It was established in 2007, in order to join the Project. All participants of the TARGET2-Securities Latvia National User Group support "The Strategy for Implementing TARGET2-Securities in Latvia" developed by the User Group.
The Eurosystem signed a Framework Agreement with Latvian Central Depositary, which in cooperation with Bank of Latvia organize the migration of securities market of Latvia to Target2-Securities.
The Bank of Latvia will ensure the settlement of cash leg of securities transactions, will open Target2-Securities cash accounts for settlement.
TARGET2-Securities cash accounts and TARGET2-Securities securities accounts will be located on the single shared platform. It gives more opportunities to the participants of the platform.
1.4.4. THE BANK OF LATVIA
The Bank of Latvia was founded on September, 1922 as the country's central bank. After Latvia entered to the USSR, in October, 1940, the bank was liquidated. Its functions were transferred to the Latvian branch of the State Bank of the USSR. In year 1990 law ―On Banks‖ were adopted, according to which were established central bank. But full functionality as a national bank it gained in 1991 after declaration of independency.23
The Bank of Latvia’s aim is to promote a smooth operation of payment systems in the Republic of Latvia. To ensure a safe functioning and efficiency of clearing and payment systems the Bank of Latvia (BoL) approves regulations. To achieve the goal, Bank performs the oversight of the payment system. Oversight results in safe and efficient operations of the payment system and its interaction with monetary policy. The control function is closely the key task of the BoL, also implementing of monetary policy, facilitating the stability of the national currency and the financial system. The Bank of Latvia carries out its task of monitoring the payment sуstеm independently from other institutions. Oversight is exercised
23 URL: http://www.bank.lv/en/about-the-bank-of-latvia/history-of-the-bank-of-latvia - 38 - over those financial services where intermediaries do not need preceding authorization to be involved in payment activities, although, where necessary, the BoL may establish special requirements for potential participants if the functioning of the payment system may be affected significantly. Supervision is exercised over those financial activities where banks and other financial intermediaries need preceding authorization from the supervisory authority (in Latvia, from the Financial and Capital Market Commission) to be able to carry out financial activities. The Bank of Latvia oversees systemically important interbank payment systems for settlement in lats that operate in the Latvia, reducing systemic risk in the entire payment system. In accordance to the Law "On the Bank of Latvia", the Bank also realize with other strategic functions: issues national currency (banknotes and coins), ensures the operation of interbank payment and clearing systems.24
The Bank of Latvia also oversees systemically important payment systems, collects information about the payment systems functioning in Latvia and after measuring their importance, decides on oversight measures. The Bank oversees each individual payment system to help its participants and operates to get a clear understanding of potential risks associated with payment systems and tries to reduce such risks. To promote the development of payment systems, the Committee on Payment and Settlement Systems of the Bank for International Settlements has published the Core Principles for Systemically Important Payment Systems, which were accepted by the governors of G-10 countries’ central banks. This document sets out the core criteria that must be met by important payment system to be declared as sufficiently safe and efficient on the international scale.25
The Bank of Latvia’s Internal Audit Department audits the operations of the systems in accordance with a time schedule approved in advance. The Bank of Latvia develops and approves regulations that govern the operation of the Bank of Latvia’s interbank payment systems and contain principles for participation in the systems, operational procedures and measures for risk reduction, in order to achieve compliance with the Core Principles for Systemically Important Payment Systems.
24 URL: http://www.bank.lv/en/about-the-bank-of-latvia/the-bank-of-latvias-statements-of-its-vision-mission- and-values
25 URL: http://www.bank.lv/en/payment-and-settlement-systems/payment-systems - 39 -
The Bank of Latvia cooperates with the Association of Latvian Commercial Banks, which represents commercial banks registered in the Republic of Latvia. Together with the twelve largest Latvian banks, the Bank of Latvia has established the National Payment Consultative Council that discusses different issues connected to the development of payment systems. The Bank of Latvia reviews, on a regular basis analyses the results of payment systems oversight, as well as publishes reports on the development of the Bank of Latvia’s interbank settlement systems.
- 40 -
2. DEVELOPMENT AND UTILIZATION OF PAYMENT
INSTRUMENTS IN KAZAKHSTAN, RUSSIA AND
LATVIA
2.1. DEVELOPMENT AND UTILIZATION OF PAYMENT
INSTRUMENTS IN KAZAKHSTAN
2.1.1. CASH
Banknotes
Official currency of Kazakhstan is Kazakh Tenge (₸) (KZT), which was introduced in November 15, 1993. National Bank of Kazakhstan (NBK), established on 13 April, 1993, is the only issuer of legal tender in the country. NBK designs, prints, distribute, identifies, replace damaged cash money. It has 17 territorial branches across the country to help in the realization of the main goal of the National Bank – to ensure the stability of prices in the country26.
The word tenge in the Kazakh derived from Turkic language meaning a set of scales. It was introduced on 15 November, 1993 to replace the Soviet ruble at a rate of 1 tenge = 500 rubles. First batch of tenge was printed in Great Britain with images of famous historical buildings, landscapes and famous people27: 1, 3, 5, 10, 20, 50 and 100.
The National Bank of Kazakhstan issued banknotes of new model in 2006. They have the same values, but they are far more exotic. The obverse is vertical and the denomination is written in Kazakh language. All denominations depict the Astana Bayterek monument, the flag of Kazakhstan, the Coat of arms, the hand print with a signature of president Nazarbayev and fragments of the national anthem. The main differences across each denomination are only the colors, the values and the reverse
26 http://www.nationalbank.kz/
27 http://www.nationalbank.kz/?docid=29 - 41 -
Coins
In year 1995 was introduced new series of tenge coins in denominations of 1,2,5,10,20. 50 tenge were introduced later in year 1997, followed by 100 tenge in 2002. Coins have the same design: in the middle part of obverse is a figure of denomination and under is a legend ―ТЕҢГЕ‖, which means tenge; on the upper side octagonal rosette is represented, on the down side the element of national ornament is drawn, in the middle of the reverse is a national emblem of the Re-public of Kazakhstan and year of issue of the coin, on the circumference the legend ―ҚАЗАҚСТАН РЕСПУБЛИКАСЫ‖, which means Republic of Kazakhstan. The difference of coins is in denomination, size and type of metal.
2.1.2. PAYMENT CARDS
The first large-scale payment cards appeared approximately half century ago, but in Kazakhstan inhabitants could fully appraise functions of such payment instrument in the middle of the last decade. Despite that fact, development of payment cards is really fast. First payment cards appeared in Kazakhstan in 1993 and the main reason was shortage of cash money. Initiators of the payment system called ―Irtysh‖ were administration of city Aksu, Pavlodar region. This project was headed by company TIE & Computer King. They developed ideology of local system based on cards with magnetic stripe and software for its functionality. System was implemented on the basis of the local branch of the Halyk Bank (former Savings Bank) and became the first bank working with plastic cards in the domestic market of Kazakhstan. Approximately in the same time Alem Bank began working with Visa International and then with other cards of international payment systems. Later Alem Bank in cooperation with company DEC developed payment system based on magnetic stripe cards for domestic market – AlemCard running in real time.
Kramds Bank purchased similar system based on magnetic stripe cards from company Dassault AT28. The main difference from projects of Halyk Bank and Alem Bank was that system was designed to work in a mixed ―on-line‖/ ―off-line‖ mode.
- 42 -
After introduction of payment cards in Kazakhstan it was spread among people. As of September 1, 1996:
More than 89,000 cards in circulation Established 613 terminals Worked 6 ATMs From November 1995 to August 1996 held more than 600,000 transactions in the retail enterprises and about 188,000 transactions for cash delivery. Volume for transactions on payments for goods and services during the same period is more than 165,000,000 tenge Average number of transactions per card of payments for goods and services for the same period was 0.67.
Some banks issue local payment cards, including Alem Card, Altyn, Caspian, City card and Irtysh- card. By the end of 2002:
235,700 cards were in circulation 2.0 million transactions, with a value of KZT 17.3 billion, were carried out 0.2% of transactions with these cards involved non-cash payments.29
With the rapidly increasing number of credit cards banks have started to become active trader’s banks, more attracted to new profits and new sources of deposit resources. With an increasing number of cardholders, merchants were given new opportunities to increase sales. Banks were receiving new profit from cardholders and merchants.
Banks found attractive way to extend credit to customers through revolving credit lines, combined with bank cards. Geography of the market has also expanded, as banks could issue cards to consumers not only close to the bank. Some large banks also issue international payment cards, including those of Europay, Visa, American Express, Diners Club, Union Card and HSBC and by year 2002:
1,260,200 such cards were in circulation
29 HSBC. Treasury Management Profiles: Kazakhstan - 43 -
18.9 million transactions, with a value of KZT 233.7 billion, were carried 3.1% of transactions involved non-cash payment.
Over the past few years significantly increased the number of banks actively emitting "electronic wallets" for both individual and for the collective members. "Card" business in Kazakhstan is experiencing a real boom. Successfully operate throughout the country and attracts more participating banks and customers processing companies as STB Card, Union Card etc. Many banks already operate and create their own payment system using plastic cards - magnetic stripe (magnetic), a memory chip and smart cards. There are attempts to create regional and local payment systems. It was a long way, but in short time Kazakhstan achieved big results. 30
Graph No. 3. Value of payment cards per capita in Kazakhstan
payment cards 16000000 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: http://www.nationalbank.kz/?docid=275
30 Andreev A., Morozov A., Loginov A. Plastic cards. 1988, p.312. - 44 -
2.2. DEVELOPMENT AND UTILIZATION OF PAYMENT INSTRUMENTS IN RUSSIA
2.2.1. CASH
Official currency of Russia is Russian Ruble (RUB). Before, the ruble was the currency of the Russian Empire and the Soviet Union. The ruble is subdivided to 100 kopecks. The word ―ruble‖ is a form of the Russian verb ― ‖ (rubit'), which meaning "to chop".
Banknotes
In year 1991 the State Bank produced 1, 3 and 5 ruble notes and introduced 200, 500 and 1,000. In 1992 was a final issue of banknotes of U.S.S.R., before the Russian Federation introduced 5,000 and 10,000 banknotes. Since the dissolution of the Soviet Union in 1991, Russian ruble banknotes were notable for lack of portraits. So, 500 banknotes were issued depicting Peter I and 1,000 depicting Yaroslav.
On 1 January 1998 a new series of notes dated 1997 were released. Modifications to the series were made in 2001, 2004, 2010 and 2014. Each new banknote series has strengthened security features, but no major design changes.
All banknotes of Russia are printed at state-owned factory Goznak in Moscow, organized in 1919 and continuing its activity up to today.31
Coins
After dissolution of Soviet Union, Russia introduced new coins in denominations: 1, 5, 10, 20, 50 and 100 rubles. On coins were depicted double headed eagle over the legend "Банк России"(Bank of Russia). Coins of 1 and 5 rubles were minted from brass-clad steel, 10 and 20 rubles from cupro-nickel and 50 and 100 from aluminum-bronze and cupro-nickel-zink. In year 1993 were issued 50 rubles from aluminium-bronze and 100 rubles from cupro-nickel-
31 Albert Pick. Standard Catalog of World Paper Money: General Issues, 7 edition, Kraus publications. ISBN 0- 87341-2079. - 45 - zinc, and 10 and 20 rubles was issued from nickel-plated steel. In year 1995 the material of 50 rubles was changed to brass-plated steel, but the coins were minted with date 1993. With growing level of inflation low denominations disappeared from circulation and some denominations were used rarely. 32
New coins were issued in 1998, depicting St. George, the Dragon and the double headed eagle. In year 2000 were issued bimetallic commemorative 10 ruble coins, with a unique holographic security feature inside the "0" of the denomination.
In 2008, it was proposed by the Bank of Russia to withdraw 1 and 5 kopeck coins from circulation and in 2009 were issued new 10 rubles coins from brass-plated steel, with optical security features.
A number of commemorative coins exist in circulation as well, depicting national historic events and anniversaries.
Coins are minted in Moscow and at the Saint Petersburg Mint, which is operating since 1724.
2.2.2. PAYMENT CARDS
The first steps in the introduction of plastic cards were made in 1988. The Soviet travel agency "Intourist" signed a contract with VISA International in London. "Intourist" became a member of this international organization (despite the fact of being non-banking institution) and had all rights, including emission. After that, Soviet citizens were able to use credit cards. But it was unpopular payment instruments, and mostly foreigners used them.
The first Russian commercial bank to issue its own card VISA was Kredo-Bank and also to join EuroCard/MasterCard.
In year 1992 Russian banks began to be members of Europay. And after having more integrating with more Russian banks, Europay established a headquarter in Moscow. But in year 1993 dynamic growth of using payment cards began, after Most Bank began to emit VISA cards.
32 Krause, Chester L., Clifford Mishler. Standard catalog of World Coins:1801-1991(18TH ed.).Klause Publications. ISBN 0873411501. - 46 -
By early 1995, about 20 Russian banks were members of Visa International. Members of Europay were 42 Russian banks. Moreover, the number of banks that started issuing cards of a system was not more than 7.33
Along with the international cards market emerged Russian interbank payment systems based on plastic cards. Interbank systems combine several banks (sometimes more than a hundred), with self-processing operations. They had bigger number of cardholders and had more developed network, conditions for entry were according to the interests of participating banks. In year 1992 were established ―STB Card‖ and in 1993 ―Union card‖. Such systems became more popular in years 1994-1995. It had a good effect on development of payment system in Russia. 34
Sharp increase in the production of plastic cards has fallen in pre-crisis time in year 1997 and the first half of 1998. So, from 1996 to 1998 volume of VISA cards increased by 3 times - up to 1.199 million pieces, cards Europay 5 times - up to 1.576 million cards, Diners Club International is almost 2 times - up to 1035 pieces.35
Crisis in 1998 radically changed the situation on the retail banking market in Russia. As a result was a situation, when payment cards existed officially, they were valid and with money, but people could not use them in payment for goods and services.
In 2000, the demand for plastic cards was growing. The reason is that people started to trust banks more. Number of credit organizations, working with international payment systems, was growing. The number of banks issuers of Europay cards, by 2000 had grown to 103, and VISA cards were by 38 banks.
Growth was caused with substantial reduction of tariffs, advertising and range of services provided by credit cards.
33 Lavrushina O. Bankovskoe delo.1998.p.519-525
34 Andreev A., Morozov A., Ravkin D.Plastic cards in Russia.Bankcentr.1995.p.256
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Graph No.4. Value of payment cards in Russia
payment cards 300000000
250000000
200000000
150000000
100000000
50000000
0 2007 2008 2009 2010 2011 2012 2013
Source: http://www.cbr.ru/PSystem/P-sys2/ratio.pdf
2.3. DEVELOPMENT AND UTILIZATION OF PAYMENT INSTRUMENTS IN LATVIA
2.3.1. CASH
The Latvian lats (LVL) were official currency of Latvia in years 1993—2013. Lats are subdivided into 100 santīmi.
Official currency of Latvia for today is euro (EUR) since 1 January, 2014. After meeting all the criteria for euro adoption, took place an assessment of European Union (EU). The process of adoption began on 1 of May, 2004, after joining to the European Union, and entering the EU's Economic and Monetary Union.36
On the fourth changeover day already two-thirds of payment in shops switched to euro, third of citizens were using euro banknotes and coins. The changeover is going smooth and is not finished yet.
36 URL: http://europa.eu/rapid/press-release_IP-13-1307_en.htm - 48 -
The front-loading of euro banknotes and coins to commercial banks started in November 2013. 283.2 million euro had been delivered to commercial banks, by the end of the year.37 The changeover is going smooth and is not finished yet.
Latvian lats can be exchanged at the official rate 1 EUR = 0.702804 LVL free of charge at post offices until March, 2014 and at commercial banks until June, 2014.38
Coins
The euro banknotes are similar for all euro area but the reverse of the coins is chosen by each country individually.
The design of the Latvian euro coins was chosen at the all-Latvian competition of ideas in 2004. The jury chose as the best the proposal sent in by Ilze Kalnina who suggested that the portrait of a Latvian folk maiden, the Freedom Monument and the coat of arms of the Republic of Latvia be depicted on the coins. The design is approved by Euro Coins Subcommittee of the Economic and Financial Council. Denominations of coins: 1, 2, 5, 10, 20, 50 cent; 1, 2 Euro.
According to Changeover plan minting of Latvian Euro coins began at the end of July, 2013. A potential producer of euro coins was chosen in the autumn 2012, the State Mints of Baden- Wuerttemberg (Staatliche Münzen Baden-Württemberg) in Germany39
2.3.2. PAYMENT CARDS
Few years ago Latvia terminated local cards, and the most widespread payment cards for today are VISA, MasterCard and American Express. But from 2002 to 2007 by Competition Council (CC) were identified prohibited agreements of 22 commercial banks, which charged higher fees for VISA and MasterCard payment cards.
37 URL: http://www.bank.lv/en/money/currency-in-circulation
38 URL: http://europa.eu/rapid/press-release_IP-14-25_en.htm
39 URL: http://www.bank.lv/en/eu-and-euro/latvian-euro-coins - 49 -
From year 2008 payment cards in country were becoming more popular and number of them was growing.
Graph No.5. Value of payment cards in Latvia
Payment cards 300000000
250000000
200000000
150000000
100000000
50000000
0 2010 2011 2012 2013
Source: http://www.ecb.europa.eu/stats/payments/paym/html/payments_n_2012.en.html
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3. COMPARISON OF MENTIONED SYSTEMS
During the time of existence ok Kazakhstan, Russia and Latvia, payment systems of these countries were changing and developing. Soviet Union, which integrated a lot of countries, also implemented one model of payment system. For the period of taking part in Soviet Union all of these countries had same payment system, same payment instruments, and one national bank. The main idea was to have the same level for all countries, and all people in the countries and across the union. After dissolution every country began its own way, as well as different payment systems. Now these countries are on relatively different levels of development.
Comparison can be done by evaluating increase in quantity of payment cards. Payment cards are one of the most frequently used payment instruments in these countries, after cash money. And payment cards are as symbol of new age technologies and multifunctional instrument.
Graph No.6. Payment cards per capita in Kazakhstan, Russia and Latvia
2.5
2
1.5 Kazakhstan Russia 1 Latvia
0.5
0 2010 2011 2012 2013
Payment card is the main payment instrument in Kazakhstan, Russia and Latvia, that shows how efficient payment system is.
From the graph we can see that the lowest quantity of payments card per person is in Kazakhstan. It is because payments cards in Kazakhstan became popular lately. Plastic - 51 - payment cards market in Kazakhstan is far from perfection. Today it is mainly represented by a number of credit cards at second-tier banks. Not every bank is offering credit cards to its customers. Plastic cards are used primarily for cash, as well as for issuing various statements, transfer money from card to card. The share of non-cash payments by plastic cards remains low - 5-6% - level.But the growth is noticeable, and the country works on it. In addition, according to banking experts, the use of banking services in our country restricts a number of factors:
Mistrust to banks (up to 35% of middle class); Ignorance of banking products (up to 20% of the middle class are not well informed about them); Not good quality of service (about 15% of the middle class are not satisfied with the range and quality of services);
Probably, in future Kazakhstan will get to a high level.
Growing number of payment cards per capita in Russia is showing dynamic growth in utilization of payment instruments and increasing popularity of non-cash payments. In the Russian market promotion card encountered a number of difficulties: low income, lack of consumer culture, obstacles at the legislative level, a large spot shadow turnover. Despite that facts growth stays stable. Commercial banks attract more people, by promoting and offering different attractive services. In accordance with it payment system of the country is growing and in comparison with Kazakhstan and Latvia stays at high level. Foreign policy of the country also supports increase of payment system’s level.
Latvia was one of the promising countries in the Soviet Union. Comparing to Russia, Latvia had a higher level of payment system, but economic causes slowed development down, and for today payment system of Russia has a higher level. Also one of the important factors is the decreasing population of the country. Payment system of Latvia functions good. But after joining to Eurozone, that situation, more probably, will change positively.
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CONCLUSIONS
During the research I have studied aspects of payment system of selected countries. Payment systems are different in every country in terms of type and structure. It is caused by historical reasons and is important to take into account differences between countries’ legal, regulatory and institutional environments. Efficiency of payment systems’ segments directly affects the final results. Payment systems of the countries have dynamic constructions which have developed over time and will continue in the future. Process of development after dissolution of Soviet Union was different in each country.
In my practical part I have used information presented by Central Banks of the countries. Central Banks plays s big role in organization of payment system. It monitors, promotes and protects payment systems of the countries.
Aim of my dissertation was to describe payment systems of selected post-Soviet countries.
By working on dissertation I concluded that the quality of payment system depends on various factors. Background of the country plays a big role, but not the main. Kazakhstan, Russia and Latvia had common payment system in Soviet Union. But despite that fact, today we see that for more than 20 years they gained different results. Factor of effective working segments is important for the payment system and economy of the country. Consumers can be considered as an important factor, the main users of payment systems’ products. From their behavior and preferences constructs payment system.
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LIST OF LITERATURE
Books
Albert Pick. Standard Catalog of World Paper Money: General Issues, 7 edition, Kraus publications. ISBN 0-87341-2079.
Andreev A., Morozov A., Loginov A. Plastic cards. 1988, p.312.
Andreev A., Morozov A., Ravkin D. Plastic cards in Russia. Bankcentre. 1995.p.256
Bank for International Settlements. Red book. Payment, clearing and settlement systems in Russia, 2011.
Biago Bossone and Massimo Cirasino. The Oversight of the Payment Systems: A Framework for the Development and Governance of Payment Systems in Emerging Economies , The World Bank, July 2001, p.7
Bruce J. Summers .Payment Systems: Design, Governance and Oversight, Central Banking Publications Ltd, London: 2012, p.3
Central Intelligence Agency, almanac. The World Factbook, United States: 2013–14 edition, ISBN 978-5-9757-0410-8.
Krause, Chester L., Clifford Mishler. Standard catalog of World Coins:1801-1991(18TH ed.).Klause Publications. ISBN 0873411501.
Lavrushina O. Banking process. Russian edition: 1998. p.519-525
Latvijas Banka. Payment and securities settlement system oversight.2013, ISBN 9789984- 888-36-1.
Looking Backward - 2000-1887 is a utopian science fiction novel by Edward Bellamy, a lawyer and writer from Chicopee Falls, Massachusetts.
SCHLOSSBERGER, Otakar. Platební služby. Part 1.Prague: Management Press, 2012. ISBN 978-80-7261-238-3.
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Tom Kokkola. The payment system: payments, securities and derivatives, and the role of the Eurosystem, European Central Bank, Frankfurt am Main: September, 2010, ISBN 978- 928990632-6, p 28.
Journal articles
Department of payment systems of National Bank of Kazakhstan. Oversight of payment systems of Kazakhstan. Almaty: June, 2011.
HSBC. Treasury Management Profiles: Kazakhstan
Information technology. 8-bit code table for Kazakh alphabet.
Law On the National Bank of the Republic of Kazakhstan, Accountability of the National Bank of Kazakhstan, 01.02.2012, Article 3.
O. Polikarpov, A. Ryzhkov. Payment cards in Kazakhstan// ―PLUS‖ journal. 23.11.1996
Online sources
A successful euro changeover in Latvia, http://europa.eu/rapid/press-release_IP-14-25_en.htm
Bank of Latvia, http://www.bank.lv/en/payment-and-settlement-systems/target2
Central Bank of the Russian Federation, http://www.cbr.ru/Eng/today/?PrtId=bankstatus
Currency in circulation in Latvia, http://www.bank.lv/en/money/currency-in-circulation
History of the Bank of Latvia, http://www.bank.lv/en/about-the-bank-of-latvia/history-of-the- bank-of-latvia
Kazakh interbank settlement center of the National Bank of the Republic of Kazakhstan, http://kisc.kz/pay_systems/mspd.html
Latvia becomes the 18th member to adopt euro, http://europa.eu/rapid/press-release_IP-13- 1307_en.htm
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Latvian Euro coins, http://www.bank.lv/en/eu-and-euro/latvian-euro-coins
NOVA: The History of Money, http://www.pbs.org/wgbh/nova/ancient/history-money.html
National Bank of the Republic of Kazakhstan, http://www.nationalbank.kz/?docid=488
Russian payment system, http://www.cbr.ru/eng/archive/archive/root_get_blob.aspx?doc_id=9092
SEPA in Latvia, http://www.sepalatvia.lv/sepa-latvia
The Bank of Latvia’s statements of its vision, mission and values, http://www.bank.lv/en/about-the-bank-of-latvia/the-bank-of-latvias-statements-of-its-vision- mission-and-values
Payment and settlements systems in Latvia, http://www.bank.lv/en/payment-and-settlement- systems/payment-systems
Publications of the National Bank of the Republic of Kazakhstan, http://www.nationalbank.kz/?docid=29
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ABBREVIATIONS
Agency for Restructuring Credit Institutions (ARCO) Almaty Clearing House (ACH) Associated Participants (AP) Automated Teller Machines (ATMs) Bank of Russia (BоR) Bank of Russia Payment System (BRPS) Banking Electronic Speedy Payment system (BESP) Committee on Payment and Settlement Systems (CPSS) Competition Council (CC) Direct Participants (DP) European Commission (EC) Electronic Clearing System (EKS) Federal Financial Markets Service (FFMS) Government Securities Market (GSM) Inter-Agency Coordinating Committee for Banking Sector Development (ICC) International Financial Reporting Standards (IFRS) International Organization of Securities Commissions (IOSCO) Interbank System of Money Transfer (ISMT) Interbank Clearing System (ICS) Kazakhstan Interbank Settlement Centre of the National Bank of Kazakhstan (KISC) National Bank of Kazakhstan (NBK) Real Time Gross Settlement System (RTGS) Russian Trading System Clearing Center (RTS) Settlement Depository Company (SDC) Single Shared Platform (SSP) State Center of Pension Payments (SCPP) Special Participants (SP) Swiss Interbank Clearing (SIC)
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