Bulk Payment Instruction Definition: A set of payment orders delivered together for processing which may be destined for several receivers. Details: Bulk payment instructions are payment instructions delivered to the clearing and settlements system as bulk files and are processed together ordered after some criteria containing at least the same sender and receiver. Note that… Read More »
Payment versus payment (PvP) Definition: A settlement mechanism that ensures that the final transfer of a payment in one currency occurs if and only if the final transfer of a payment in another currency or currencies takes place. see Principles for financial market infrastructures https://www.bis.org/cpmi/publ/d101.htm Details: PvP is in fact a cross-border cross-currency unitary operation.… Read More »
Correspondent banking network Definition: Correspondent banking is an arrangement whereby one bank (correspondent) holds deposits owned by other banks (respondents) and provides those banks with payment and other services (CPMI (2016)). Correspondent banking networks are critical for firms and households that conduct business or send payments internationally. Correspondent banking – final report https://www.bis.org/cpmi/publ/d147.htm Details: Correspondent… Read More »
Cross-border payments Definition: Cross-border payments are those type of payment where the payer and payee reside in different jurisdictions. Many of these are also cross-currency payments – that is, payments where the payer and payee are respectively debited and credited in different currencies. Payments within monetary unions or payments in a common invoice currency may… Read More »
Repurchase Agreement (Repo) Definition: An agreement in which money is lent against securities with a change in beneficial ownership, on the basis that they will be bought back at the end of the day or on a later date. This process may be automated. Details: Repos are typically used to raise short-term capital to meet… Read More »
Deferred Net Settlement System (DNS) Definition: A bilateral or multilateral net settlement system where settlement takes place on a net basis after many transactions have been processed, in which there is a time lag between acceptance of payment and its actual settlement. Details: This type of payment system is also called batch settlement system. Payments… Read More »
Definition Everything you read in the newspapers is absolutely true, except for the rare story of which you happen to have firsthand knowledge. Details: Too many people use some terms without understanding them beyond the definition. Too many “experts” use the terms but they never had experience with the actual implementation of anything in #banking,… Read More »
CBDC Definition: The CPMI (BIS – Committee on Payments and Market Infrastructures) defines a CBDC as “a digital form of central bank money that is different from balances in traditional reserve or settlement accounts.” A CBDC can leverage cryptotechnologies such as DLT/blockchain or be based on a centralised database. A CBDC can also be general… Read More »
Fiat Currency Definition: A government-issued currency that is considered legal tender in a specific jurisdiction. Fiat currency can include both physical banknotes/coins as well as electronic reserves made available to financial institutions with a reserve account at the central bank. Fiat currency is fully backed by the government that issues it and is not backed… Read More »
Gridlock Definition: A situation that can arise in a funds or securities transfer system in which the failure of some transfer instructions to be executed (due to insufficient funds or securities balances) prevents fulfillment of a substantial number of instructions given by other participants Gridlock resolution Definition: Resolution of the gridlock condition without overdrawing the… Read More »