Opinion of the European Central Bank of 7 August 2003 at the request of the Banca d’Italia on a draft regulation on payment systems, payment infrastructures and payment instruments (CON/2003/14)
Date: 2003-08-07
Institutions: European Central Bank
Subjects: Italy, central bank, financial supervision, national law, payment system

EN

OPINION OF THE EUROPEAN CENTRAL BANK

of 7 August 2003

at the request of the Banca d’Italia

on a draft regulation on payment systems, payment infrastructures and payment instruments

(CON/2003/14)

1. 

On 10 June 2003 the European Central Bank (ECB) received a request from the Banca d’Italia for

an opinion on a draft regulation to be issued by it on payment systems, payment infrastructures and

payment instruments (the ‘draft regulation’). 

2. 

The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing

the  European  Community  and  on  the  third  and  fifth  indents  of  Article  2(1)  of  Council  Decision

98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national

authorities  regarding  draft  legislative  provisions1  since  the  draft  regulation  relates  to  a  national

central bank (NCB) and to clearing and payment systems. In accordance with the first sentence of

Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council of the

ECB has adopted this opinion.

3. 

The  ECB  very  much  welcomes  the  opportunity  to  give  its  opinion  on  the  draft  regulation,  as  it

addresses  matters  which  directly  pertain  to  the  core  fields  of  competence  of  the  Eurosystem.

According  to  the  explanatory  note  provided  by  the  Banca  d’Italia,  the  draft  regulation  has  three

main purposes: first, to provide the necessary regulatory framework to allow the Banca d’Italia to

carry out its oversight function, i.e. ‘to ensure the efficiency and reliability of clearing and payment

systems’2  in  accordance  with  the  Eurosystem  policy  stance  on  payment  systems  oversight;

secondly,  to  give  guidelines  and  principles  to  be  followed  by  all  payment  system  operators

(including non-financial ones), summarising the experience gained by the Banca d’Italia in the field

of payment systems oversight over the last years; and, thirdly, to increase the transparency of the

oversight policy followed by the Banca d’Italia.

4. 

Oversight is one of the core competencies attributed to the Eurosystem by the Treaty. Indeed, the

oversight  of  payment  systems  had  always  been  recognised  as  one  of  the  main  functions  of  the

NCBs,  although  this  was  not  always  based  on  a  specific  and  clearly  formulated  legal  basis.  The

1 
2 

OJ L 189, 3.7.1998, p. 42.
Article  146  of  Legislative  Decree  385  of  1  September  1993,  Supplemento  ordinario  Gazzetta  Ufficiale,  No  230,
30.9.1993.

                                                     
framework for this function, although informal, was effective and successful, since it was based on

the  technical  experience  and  on  the  moral  suasion  of  the  NCBs.  Moreover,  the  international

consistency  and  effectiveness  of  this  function  were  ensured  through  co-ordinated  action  among

central banks on the basis of principles established either at the G-10 or European Union level. 

5. 

Article 105(2) of the Treaty and Article 3.1 of the Statute of the European System of Central Banks

and  of  the  European  Central  Bank  provide  the  legal  basis  for  the  oversight  function  of  the

Eurosystem, together with Article  22  of  the  Statute,  which  reads:  ‘The  ECB  and  national  central

banks  may  provide  facilities,  and  the  ECB  may  make  regulations,  to  ensure  efficient  and  sound

clearing and payment systems within the Community and with other countries’. In general, within

the Eurosystem oversight activities are performed by the NCBs, in line with the common oversight

policy stance defined by the Governing Council of the ECB. The aims of the oversight of clearing

and payment systems are the maintenance of systemic stability, the promotion of efficiency and the

safeguarding of the transmission channel for monetary policy. The above excludes the interference

in the field of the Eurosystem’s oversight competence by any Community or national body other

than  a  central  bank  acting  within  the  framework  of  the  European  System  of  Central  Banks

(ESCB)/Eurosystem. 

6. 

Article 146 of Legislative Decree 385 of 1 September 1993 (the ‘Banking Law’), which entitles the

Banca d’Italia to promote the regular operation of payment systems, reflects at national level the

framework that has been created at the European level, as described above. The ECB notes that the

Banca d’Italia sees a benefit in formalising its oversight role in accordance with Article 146 of the

Banking  Law,  which  entitles  it  to  issue  regulations  to  promote  the  regular  operation  of  payment

systems. The majority of NCBs carry out this function on the basis of their statutes/organic laws

without any explicit and detailed legal provisions. In this respect, the ECB would like to recall that

it  has  not  so  far  issued  a  regulation  on  the  conduct  of  oversight  under  Article  22  of  the  Statute.

Such a regulation would be directly applicable and binding on the addressees, therefore effectively

repealing all corresponding NCB rules.

7. 

The  draft  regulation  proposes  to  entrust  the  Banca  d’Italia  with  the  carrying  out  of  specific

oversight  activities.  In  this  respect,  as  described  in  the  abovementioned  explanatory  note,  it

addresses  in  particular  issues  related  to  (i)  the  operation  of  a  payment  system  or  of  individual

phases  thereof;  (ii)  the  operation  of  infrastructure  services;  (iii)  payment  instruments;  and

(iv) disclosure requirements. As explained in Recital 3 the draft regulation ‘[takes] into account the

positions  expressed  within  the  Eurosystem  and  those  emerging  in  the  fora  of  international

cooperation’. In this respect, the explanatory note specifies that the draft regulation implements in

Italy  the  ‘Core  Principles  for  systemically  important  payment  systems’3,  which  the  Governing

Council  adopted  on  25  January  2001  (the  ‘Core  Principles’),  included  in  the  set  of  minimum

standards used by the Eurosystem for its common oversight policy on payment systems, as well as

the  Eurosystem’s  ‘Oversight  standards  for  euro  retail  payment  systems’  (the  ‘Retail  Standards’)

3 

Bank for International Settlements, January 2001.

2

                                                     
adopted by the Governing  Council  on  26 June  2003.  Furthermore, reference is  made  to  the  ECB

policy statement issued on 21 June 2000 on the ‘Role of the Eurosystem in the field  of  payment

systems  oversight’4.  Although  the  proposal  is  in  line  with  the  payment  systems  oversight

competence  of  the  Eurosystem,  the  ECB  takes  the  view  that  it  would  be  useful  if  the  draft

regulation  itself  reflected  the  role  of  the  Eurosystem  more  clearly  and  clarified  that  the  Banca

d’Italia would continue to conduct oversight within the framework of the Eurosystem. This could

be achieved, for example, by making an explicit reference in a recital of the draft regulation to the

aforementioned  ECB  policy  statement,  the  adoption  by  the  Governing  Council  of  the  Core

Principles and the Retail Standards, and to the adoption by the Governing Council on 23 May 2003

of the ECB’s report on ‘Electronic money system security objectives’.

8. 

As  a  general  point,  the  ECB  notes  that  on  a  number  of  occasions  the  draft  regulation  regulates

oversight activities and policies that have not been agreed upon at Eurosystem level. This is not a

problem per se. In  line  with  the  provisions  of  the Treaty  and the  Statute, the  Governing  Council

formulates the common policy stance. In areas not specifically covered by a common Eurosystem

oversight policy framework, policies defined at the NCB level apply within the framework of the

objectives and principles defined at the Eurosystem level. Furthermore, it is noted that a national

extension of oversight policies and activities beyond the agreed Eurosystem policies will have to be

carefully  considered  from  a  level  playing  field  perspective.  Against  this  background,  the  ECB

underlines  that,  if  the  Eurosystem’s  oversight  policy  changes  owing  to  developments  in  the

payment  and  settlement  field,  the  Banca  d’Italia  will  have  to  align  its  oversight  policies  and

activities accordingly. In order to provide for flexibility in the Banca d’Italia’s regulatory oversight

framework  to  accommodate  possible  further  developments  at  the  Eurosystem  level,  it  would  be

useful for the draft regulation to include a reference to this matter in a recital. Such a recital could

be worded as follows: ‘Whereas, the Eurosystem’s oversight policies and activities may be subject

to changes owing to developments in the field of payment and settlement systems’.

9. 

Oversight is included among the activities of financial agencies that are covered by the ‘IMF Code

of good practices on transparency in monetary and financial policies’. Against this background and

in  view  of  the  general  transparency  practices  of  the  Eurosystem  the  ECB  considers  it  to  be

important that the Banca d’Italia conduct public consultations on oversight legislation. The Banca

d’Italia may also inform or alert the market with respect to future developments in the Eurosystem

oversight policies. 

10.  More specifically, as regards the content of the draft regulation the ECB has a number of comments

on  the  individual  articles.  First  of  all,  the  ECB  understands  that  the  recitals  are  intended  to

summarise the main principles guiding the methodology used by the Banca d’Italia in conducting

its  oversight  function.  The  recitals  rightly  recognise  the  contribution  of  an  efficient  and  reliable

payment  system  to  financial  stability  and  the  preservation  of  public  confidence  in  the  currency,

4 

These  documents  are  published  on  the  websites  of  the  ECB  (www.ecb.int)  or  the  Bank  for  International  Settlements
(www.bis.org).

3

                                                     
underline the relevance of clear and transparent rules, procedures and practices in  order  to foster

market discipline and development, and list the most relevant aspects to be taken into consideration

by the Banca d'Italia in carrying out its oversight function. It might, however, be useful to introduce

an additional recital or even a separate article to explain the concept and the objectives of oversight

as  such.  It  could  be  mentioned  that  oversight  is  a  task  of  central  banks,  principally  intended  to

promote  the  smooth  functioning  of  clearing  and  payment  systems  to  protect the financial  system

from possible ‘domino effects’ which may occur when one or more participants in the payment or

clearing  system  incur  credit  or  liquidity  problems  and  to  foster  the  efficiency  and  soundness  of

clearing and payment systems. 

11.  Article 1 sets forth a number of definitions of terms and concepts that are used throughout the draft

regulation. In general, the ECB finds it very useful to include definitions of those concepts that are

most relevant and widely used in the draft regulation in order to ensure a common understanding.

Nevertheless,  it  would  recommend  that  the  terminology  and  definitions  used  be  brought  in  line

with those agreed upon at the ESCB/Eurosystem level (cf. definitions of payment systems concepts

in the report on ‘Payment and securities settlement systems in the European Union’ (Blue Book))5.

More specifically, definition (a) on reliability refers to ‘the limitation of systemic risks and other

risks that may jeopardize or negatively affect the proper and continuous operation of the payment

system and public confidence in payment instruments’. In this context, it might be worthwhile to

state the ‘other risks’ explicitly, such as, in particular, credit, liquidity, operational and legal risks.

Finally,  the  ECB  notes  that  definition  (l)  defines  ‘payment  system’  and  ‘system’.  Taking  into

account that the Banca d'Italia is also entrusted with the oversight of securities settlement systems,

the use of a definition close to that in Article 2(a) of the Settlement Finality Directive6 should be

considered in order to obtain a Community-consistent definition. 

12.  Article 2 of the draft regulation aims to define  its scope.  It  specifies that  the  provisions  apply  to

(a) payment systems operated by the Banca d’Italia; (b) systems that settle in central bank money;

(c) other systems  considered  important by  the  Banca  d’Italia  because  of  specific  parameters;  and

(d) systems that effect the transfer and withdrawal of money with the use of payment instruments.

The ECB welcomes the scope of the draft regulation and the conduct of oversight with respect to

both systems run by the Banca d’Italia and the private sector, as this is fully in line with the agreed

Eurosystem  oversight  policy.  It  will  also  contribute  to  enhancing  the  credibility  of  central  banks

carrying out oversight over both systems run by central banks and privately run systems. However,

regarding  the  scope  of  the  draft  regulation,  it  is  not  entirely  clear  to  the  ECB  whether  the  draft

regulation  intends  to  comprise  also  the  operators  and  the  oversight  of  securities  clearing  and

settlement systems. In this  respect, the  ECB  notes  that,  in  particular,  Recitals  1,  2 and  3 refer to

both  clearing  and  payment  systems  and  clearing  and  settlement  systems  and  Article  2  does  not

explicitly exclude securities clearing and settlement systems from the scope of this draft regulation.

5 
6 

ECB, June 2001.
Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and
securities settlement systems, OJ L 166 11.6.1998, p. 45.

4

                                                     
However, the ECB understands that the draft regulation would apply to payment systems only. In

addition,  according  to  Article  2  the  provisions  of  the  draft  regulation  apply  to  ‘systems’  only.

However,  as  Article 5  of the draft  regulation  refers also  to  the  issuers  and  managers  of  payment

instruments, the ECB proposes to clarify in Article 2 that they would also fall within its scope, as

well as infrastructure operators mentioned in Article 4. The ECB also considers  it  important that

the  draft  regulation  be  applied  to  other  payment  arrangements,  e.g.  quasi-systems,  and  that  a

reference or clarification is therefore included. The specific aim of Article 3 of the draft regulation

is the implementation of the ten Core Principles. The ECB notes that the draft regulation does not

seem to be limited to systemically important payment systems; however, it would seem to be useful

that, in particular, the wording follows more closely the requirements set out in the Core Principles.

13.  Article  4  aims  to  make  the  draft  regulation  applicable  to  infrastructure  service  operators  which

permit data management for the transfer of funds or the netting, in whole or in part, of reciprocal

debit  obligations.  The  draft  regulation  gives  specific  importance  to  ‘significant  infrastructure

services’ i.e. service operators handling a high number of data or data with specific characteristics

or  performing  specific  activities  when  gathering  and  sorting  the  data  for  transmission  to  the

payment system. According to Article 4(2) significant infrastructure services operators will have to

comply  with  more  stringent  requirements.  By  making  the  draft  regulation  applicable  to

infrastructure service operators the Banca d’Italia widens the scope of the Core Principles to such

entities.  It  justifies  the  broad  scope  of  application  of  the  draft  regulation  by  explaining  that  the

concern  about  the  smooth  functioning  of  payment  systems  implies  the  specific  control  of

infrastructure  services.  The  ECB  notes  the  widening  of  the  scope  of  the  Core  Principles  to

infrastructure service  operators.  Indeed,  the  latter  play  a  pivotal  role  in  the  operation  of  clearing

and  payment  systems  as  disruptions  in  the  regular  operation  of  network  infrastructures  could

seriously and adversely affect the smooth functioning of systems. Furthermore, Article 4(1)(b) of

the draft regulation requires, inter alia, that the infrastructure service provider ‘shall ensure security

measures and controls’ that ‘can ensure […] traceability and an appropriate level of confidentiality

of  information’.  The  ECB  would  like  to  point  in  this  context  to  the  fact  that  certain  types  of

electronic money schemes may not allow for the traceability of information. If this requirement is

upheld it might interfere with the development and operation of certain types of such schemes. The

same  comment  applies  as  regards  the  requirement  of  traceability  of  any  payment  transaction

(cf. Article 5(b)). In particular, regarding the usually rather small values transferred via electronic

money  schemes,  a  general  traceability  requirement  would  not  be  necessary  from  a  money

laundering perspective either. Finally, the ECB notes that according to  Article  4(2)(c) significant

infrastructure services operators ‘shall […] favour interconnection with other infrastructures’. The

obligation contained in this rule needs to be further clarified as its exact content and application are

not fully clear. 

14.  Article 6 of the draft regulation is of particular importance as it provides the Banca d’Italia with the

power to collect all data and information that support the effective conduct of  oversight function

5

from  the  entities  falling  within  its  scope.  In  addition,  the  Banca  d’Italia  may  also  take  adequate

measures  to  ensure  the  general  availability  of  information  held  to  be  significant.  The  ECB

welcomes the fact that the draft regulation will give the Banca d’Italia the power to gain access to

all  information  and  data  relevant  for  the  performance  of  its  oversight  task.  The  draft  regulation

should  clearly  state  the  powers  conferred  on  the  Banca  d'Italia  and,  to  the  extent  possible,  the

consequences of not complying with its requests for the operators.  

15.  Finally, the ECB notes that Article 7 confers on the Banca d’Italia the power to issue general and

specific rules implementing the draft regulation. If such rules of general application should concern

aspects of relevance for the Eurosystem, the ECB’s opinion should be requested.

16.  The  ECB  confirms  that  it  has  no  objection  to  the  competent  national  authorities  making  this

opinion publicly available at their discretion. This opinion will be published on the ECB’s website

six months after the date of its adoption.

Done at Frankfurt am Main on 7 August 2003.

Member of the Executive Board of the ECB

Member of the Executive Board of the ECB

[signed]

[signed]

Tommaso PADOA-SCHIOPPA

Gertrude TUMPEL-GUGERELL

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