Oversight of other areas
Payment instruments are a vital part of the payment system in a broader sense, as they enable users to transfer funds. The scheme of an individual payment instrument defines a set of procedures, rules and technical standards for the purpose of making payments.
The risks inherent in the use of payment instruments are not generally defined as systemic risks, although ensuring the security and effectiveness of payment instruments is certainly very important for encouraging commercial activities and ensuring economic efficiency and public confidence in the currency. In light of the above, the oversight function also covers the area of the following payment instruments:
• SEPA direct debits;
• SEPA credit transfers;
• Payment cards;
• Other (new) payment instruments used in the broader environment of the Single Euro Payments Area (SEPA), for example a payment instrument within the framework of an electronic money scheme.
In carrying out the oversight of payment instruments/schemes the Bank of Slovenia follows the following Eurosystem guidance and standards:
• Harmonised Oversight Approach and Oversight Standards for Payment Instruments;
• Oversight Framework for Card Payment Schemes – Standards;
• Oversight Framework for Credit Transfer Schemes;
• Oversight Framework for Direct Debit Schemes.
Payment flows within correspondent banking may be carried out both directly between banks and indirectly between banks and payment systems. In light of the volume of payment transactions through such arrangements, they constitute an important link in the payment chain.
In correspondent banking there is an agreement where one bank (the settlement bank or the bank offering services) executes or receives a payment on behalf of another bank (the client bank). In some cases such payment flows are concentrated in only a few banks, which has an impact on the existence of particular risks.
The activities of the oversight function take the form of monitoring and assessing the adequacy of the management of potential risks in the area of correspondent banking. Hence the importance of cooperation with the function of banking supervision, which supervises banks in general terms, (also) with a view to avoiding dual supervision of these entities.
External service providers
The framework of implementation of the oversight function also includes external providers of critical services within payment and settlement systems. They provide (critical) services that are key to ensuring information security, and the availability and smooth functioning of the fundamental operations of the payment or settlement system.