to a potentially disastrous chain reaction of failures. minimizing systemic risk in payment and settlement systems is not only an objective in itself. it is also a precondition for achieving financial stability and for the efficient conduct of monetary policy. these, in turn, are necessary for the integrity of the euro as a major global currency. our oversight role is enshrined in both domestic and european legislation. domestically the legal basis is the central bank act of 1997. in the broader european context, one of the basic tasks of the european system of central banks ( of which the bank is a member ) is " to promote the smooth operation of payment systems ". the eurosystem is further empowered " to ensure efficient and sound clearing and payment systems within the community and with other countries ". back in the early 1990s, central banks focussed on large - value netting systems where the safety concerns were more evident. gradually, however, the focus of oversight has been extended, to varying degrees in different countries, to : • real - time gross settlement systems, • retail payment systems, • payment instruments such as payment cards, direct debits and credit transfers, • third - party service providers, • central counterparties, and • securities clearing and settlement systems. the extensive range of activities now subject to oversight reflects their potential impact on financial stability and their links to the smooth conduct of monetary policy. central banks are organised so that their operational role in payment systems does not conflict with their oversight role. the bank currently directly oversees the irish real - time gross settlement system, iris, and the two retail payment systems concerned with paper and electronic clearing. in doing so, it applies the provisions of the central bank act, 1997 that require all payment systems operating in the state to be approved, and have their rules vetted, by the central bank. in approving any payment system's rules, we must have regard to the "... proper and orderly regulation of the payment system concerned and of competition between payment systems... ". in assessing the soundness of these domestic payment systems, we use as reference the internationally recognised principles developed by the committee on payment and settlement systems of the central banks of the g10 countries. in addition to these direct arrangements, the central bank is involved in a number of co - operative oversight roles. thus, in relation to the target system, which interlinks all eu euro - denominated real time gross settlement systems, we participate in the eurosyst

for making payments. the origins of sepa lie in the introduction of the euro in 1999. although wholesale - or interbank payments were catered for by target, citizens of the participating countries did not have a comparable facility for making cross - border, non - cash, low cost, retail payments in euro, even though they shared common banknotes and coins once the euro cash changeover took place in 2002. even now, each national retail payments market remains essentially isolated from those of other euroarea member states, with levels of efficiency and service varying from one euro - area member state to another. as a result, cross - border retail payments in euro can be slower and less efficient than comparable payments made within any one country. this is because payment systems rules, procedures, standards and technical systems vary from country to country. therefore, while goods and services can be traded freely across the euro area, the underlying payments are still hampered by national borders and arrangements, so that the completion of the'internal market'is to some degree frustrated. the sepa project aims to ensure that all consumers throughout the euro area, whether individual citizens or corporate entities, will have available to them common retail payment instruments. in principle, at the end of the process in 2010, all euro - area bank customers will be able to use one payment account and one set of standardized instruments. this simplified payments world that will result from sepa will be a major benefit for those who make cross - border payments. when the sepa project is completed, all euro area payments will, in effect, become domestic and the current differentiation between national and cross - border payments will disappear. competition should be enhanced, since all consumers using payment services, and not just those making cross - border payments, will be able to choose between payment service providers throughout the euro area, regardless of where they might be located. this should foster innovation in the provision of payment services. it should also not be forgotten that sepa will bring the benefits associated with a very real modernisation of payment functionality throughout the euro area. thus, while it is acknowledged that sepa undoubtedly involves large - scale investment by the banking industry, in the longer - run, the opening up of the euro area payments market to competition means that the industry itself should share in the benefits of this project. one very topical debate in the sepa arena relates to how payment cards - in particular debit cards can become sepa - compliant. in this regard, the eurosystem recently