EN ECB-PUBLIC  
 
  
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 10 July 2014 
on the approval of payment systems 
(CON/2014/53) 
 Introduction and legal basis 
On 5 June 2014, the European Central Bank (ECB) received a request from the Central Bank of Malta 
(CBM) for an opinion on draft Directive No 13 on the a pproval of payment systems (hereinafter the ‘draft 
CBM Directive’). 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third and fifth indents of Article 2(1) of Council 
Decision 98/415/EC1, as the draft CBM Directive concerns  the CBM and payment and settlement 
systems. In accordance with the firs t sentence of Article 17.5 of the Rules of Procedure of the European 
Central Bank, the Governing Council has adopted this opinion. 
 1. Purpose of the draft CBM Directive 
1.1 Following legislation enacted in 2013
2 amending the Central Bank of Malta Act3 (hereinafter the 
‘CBM Act’), the CBM has the power to issue directives regulating the approval of payment systems
4, as well as to order the closure, suspension or revocation of approval of non-compliant 
payment systems5.  
1.2 The draft CBM Directive sets out both the parame ters and the applicable terms and conditions for 
approving payment systems before they commence operations. It also sets out the procedure to 
close or suspend the operation of a non-compliant payment system pursuant to Article 34(2) of the CBM Act. 
1.3 The draft CBM Directive will constitute a legally  binding instrument and w ill be published shortly 
after the ECB issues its opinion. It is envisaged that the draft CBM Directive will enter into force 
upon publication. 
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consulta tion of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).   
2  Act XIII of 2013. 
3  Chapter 204 of the Laws of Malta. 
4  Article 34(5) of the CBM Act. 
5  Article 34(2)(a) and (b) of the CBM Act. 
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2  
2. General observations 2.1 The draft CBM Directive has already been s ubject to a public consultation procedure with 
prospective operators who may be interested  in setting up a payment system in Malta. 
2.2 The ECB has prepared [and adopted] a regula tion on oversight requirements for systemically 
important payment systems (hereinafter the ‘SIPS Regulation’)
6. The SIPS Regulation implements 
the CPSS-IOSCO principles in the euro area in a le gally binding manner. It defines the criteria for a 
payment system to qualify as being systemically important and lays down requirements aimed at 
ensuring the efficient management of legal, credit,  liquidity, operational, general business, custody, 
investment and other risks. It also sets requi rements for sound governance arrangements, objective 
and open access and the efficiency and effectiveness of systemically important payment systems (SIPS). 
2.3 The SIPS Regulation will be directly applicable in Malta and the rest of the euro area and enjoy 
supremacy over national law in the field of oversight  of SIPS. The draft CBM Directive will require 
further review by the consulting authority in order to ensure full consistency with the SIPS 
Regulation in so far as the relevant definitions and the provisions on sanctions are concerned. 
 3. Temporal scope of the draft CBM Directive and definitions 3.1 There is some ambiguity concerning the temporal  scope of the draft CBM Directive. Article 1(2) 
and Article 3(1) make it clear that payment systems are to be approved by the CBM prior to becoming operational. In addition, Article 3(3) st ates that the draft CBM Directive will apply to the 
approval of a ‘new payment system’, thus implying that pre-existing payment systems do not fall within its scope. Article 3(4) requires additiona l safeguards to be put in place when the CBM 
determines that a ‘proposed payment system’ can be classified as a SIPS. However, the definition 
of a SIPS in Article 2 refers to ‘... the only payment system in Malta, or ... the principal payment system in terms of aggregate value of payments’,  or one which has been so designated under 
paragraph 5 and Annex I of CBM Directive No 2. It  seems that these criteria can only be satisfied 
by payment systems already in operation prior to the entry into force of the draft CBM Directive. 
3.2  If the intention is that the draft CBM Directiv e should only apply to the a pproval of a ‘new payment 
system’, the ECB recommends amending the definition of a SIPS and inserting a grandfather clause which makes it clear that payment systems that were in operation prior to the entry into force of the 
                                                 
6  Regulation (EU) No YYY/2014 of [20 J une 2014] on oversight requirements for sy stemically important payment systems 
(ECB/2014/28). Not yet published in  the Official Journal. 
ECB-PUBLIC  
3 draft CBM Directive7 will continue to be subject to the cond itions and legal provisions applicable at 
the time8. 
3.3 In addition, the definition of a SIPS in the draft CBM Directive is narrower than that of Article 1(3) 
of the SIPS Regulation, which lists specific criteria for a payment system to be identified as a SIPS. In order to ensure consistency with the SI PS Regulation and the CPSS-IOSCO principles, and 
indeed a harmonised concept of what a SIPS is  throughout the euro area, the ECB therefore 
recommends that the draft CBM Directive is amended accordingly. 
3.4  The ECB notes that the draft CBM Directive does not define the term ‘systemic risk’. Since this is a 
key concept for the proper functioning of the draft CBM Directive, the ECB recommends that a 
definition of this term is inserted and that it fully reflects the definition in the aforementioned 
CPSS-IOSCO principles. 
 4. The CBM’s tasks under the draft CBM Directive  
4.1 Under Article 34 of the CBM Act, the CBM is the competent authority to oversee and regulate the 
operation of, and participation in, payment systems. No person is authorised to set up and operate a 
payment system unless the payment system and its  rules are approved by the CBM in accordance 
with the application procedure provided for in the draft CBM Directive.  
4.2 In view of the resources required for the pe rformance of these tasks, the ECB has consistently 
expressed its concern that, when allocating additi onal tasks to national central banks, it must be 
ensured that they have sufficient human and fi nancial resources, both in terms of quantity and 
quality, for all of their tasks, and in particular th at their capacity to fulfil their European System of 
Central Banks or Eurosystem-re lated tasks is not affected. 
 5. Sanctions Under paragraph 7(3) of the draft CBM Directive, the CBM will have the right to impose sanctions in 
accordance with Article 56 of the CBM Act and th e provisions of CBM Directive No 12 on 
Administrative Measures and Penalties for Infri ngements under the Central Bank of Malta Act
9. The draft 
CBM Directive lays down a set of measures that the CBM may take in certain circumstances, including 
when a payment system or a SIPS ‘is failing or h as failed to comply with any condition and/or 
requirement set out by the Bank’10. As the SIPS Regulation lays down specific corrective measures and 
sanctions, the CBM will have to apply the draf t CBM Directive to SIPS  in accordance with the 
                                                 
7 Namely TARGET2-Malta and MaltaClear, as designated in Annex I of CBM Dir ective No 2 on Payment and Securities 
Settlement Systems. 
8 Namely the aforementioned CBM Directive No 2. 
9  The ECB expressed its views on CBM Directive No 12 in Opinion CON/2011/105. All ECB opinions are published on 
the ECB’s website at www.ecb.europa.eu. 
10  Article 6(1) and the following paragraphs of the draft CBM Directive. 
ECB-PUBLIC  
4 requirements of the SIPS Regulation, to ensure the av ailability of effective, proportionate and dissuasive 
sanctions, and to revoke any provisions of the draft CBM  Directive which are not in conformity with the 
SIPS Regulation. 
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 10 July 2014. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI