ANNUAL REPORT 2008 - Polymer Bank Notes of the World

4.2 RETAIL PAYMENT SYSTEMS ANDINSTRUMENTSThe Eurosystem’s oversight also covers retailpayment systems and payment instruments. In2008 the ECB continued to monitor the smoothfunctioning of STEP2, which is a paymentsystem for cross-border, and increasingly alsofor domestic, retail payments in euro, operatedby EBA CLEARING. In 2008 a number ofchanges in the system had to be assessed againstthe applicable oversight standards.On 28 January 2008 EBA CLEARING launcheda SEPA credit transfer service in STEP2 for theprocessing of credit transfers in compliancewith the SEPA credit transfer scheme rulebookof the European Payments Council (EPC).In May 2008 an additional intraday cyclewas introduced for the SEPA credit transferservice to cater for the demands arising fromthe migration of euro area countries’ domestictraffic to this new service. A major change inthe system occurred on 8 December 2008,when the settlement of the SEPA credit transferservice was moved to TARGET2. Prior tothat date, the credit transfer service settled inEURO1, as the other STEP2 services continueto do. These changes did not alter the levelof compliance of STEP2 with the applicableoversight standards.In January 2008 the Governing Councilapproved the oversight framework for cardpayment schemes operating in the euro area,taking into account the comments receivedin the public consultation held in 2007. InMay 2008 the Eurosystem started its oversightassessment of card payment schemes operatingin the euro area against the newly establishedoversight standards. The assessment includes26 schemes, four of which are international.International card schemes are being assessedby cooperative assessment groups consistingof a lead overseeing central bank and othervolunteering central banks. 23 The assessmentsof all individual national and international cardschemes will be subject to peer reviews in orderto ensure equal application of the oversightstandards. It is envisaged that an overallassessment report describing the main results atthe aggregate level will be published.In 2008 the Eurosystem started to developoversight frameworks for the new SEPApayment instruments developed by the EPC,namely the credit transfer scheme that wasput in place as from 28 January 2008 and thedirect debit scheme planned for 2009. Once theoversight frameworks have been set out, it isenvisaged that they will be published for publicconsultation.4.3 SECURITIES AND DERIVATIVES CLEARINGAND SETTLEMENTThe Eurosystem has a strong interest in thesmooth functioning of securities clearing andsettlement systems because failures in theclearing, settlement and custody of collateralcould jeopardise the implementation ofmonetary policy, the smooth functioning ofpayment systems and the maintenance offinancial stability.In its capacity as a user of securities settlementsystems (SSSs), the Eurosystem assesses thecompliance of SSSs in the euro area, as well aslinks between those SSSs, against theEurosystem user standards. 24 SSSs and links areeligible for Eurosystem credit operations if theyfulfil these user standards, which also providethe basis against which the Eurosystem assessesany new SSSs and links or significant updates ofthose systems already eligible.In 2008 a new system (VP Lux) and one newrelayed link were assessed and found to becompliant with the Eurosystem user standards.The Governing Council also assessed theSlovakian SSS in preparation for the entry of23 The ECB is the Eurosystem’s lead overseer for VISA, AmericanExpress and Diners/Discover. It participates as an assessmentgroup member in the cooperative oversight of MasterCard, whilethe Nationale Bank van België/Banque Nationale de Belgiqueacts as lead overseeing central bank.24 “Standards for the use of EU securities settlement systems inESCB credit operations”, January 1998.166 ECBAnnual Report2008