The general objectives of the Bank's regulatory regime are to ensure that payments and securities settlement systems in the State are safe, effective and efficient, and that access to such systems is not restricted. In addition, the systems themselves should not cause, or add to, instability in the operation of financial markets.
Our principal aim is to minimise systemic risk, i.e. the risk that the failure of one participant in a payment system to meet its obligations could result in other participants failing to meet theirs, thus leading to a chain reaction in payment systems.
We are also concerned with the efficiency of payment systems, as this is seen as complementary to systemic stability. Moreover, payment systems and instruments supporting the currency must be seen to be secure, in order to maintain public confidence in the currency.
Furthermore, since payment systems are an essential vehicle for the implementation of monetary policy, regulation is aimed at safeguarding the transmission channel for monetary policy operations.
Statutory Basis for Regulation
Under the Central Bank Act, 1997,we are empowered to regulate payment and securities settlement systems. The Act provides for us to authorise all such systems in the State and to approve their rules. Our role in this area stems from Article 105(2) of the Maastricht Treaty and Article 3 of the statute of the ESCB, which state that "The basic tasks to be carried out through the ESCB shall be... to promote the smooth operation of payment systems".