BIS Committee on Payments and Market Infrastructures

BIS Committee on Payments and Market Infrastructures
Name	BIS Committee on Payments and Market Infrastructures
Formed	2005 (reconstituted from CPSS)
Predecessor	Committee on Payment and Settlement Systems
Headquarters	Basel
Region served	International
Parent organization	Bank for International Settlements

BIS Committee on Payments and Market Infrastructures is an international standard‑setting body housed within the Bank for International Settlements that develops policy for payment, clearing and settlement systems, wholesale market infrastructures, and central counterparties, operating alongside other bodies such as the Financial Stability Board, International Monetary Fund, World Bank, Basel Committee on Banking Supervision, and Group of Twenty. It issues standards, guidance and monitoring reports that inform national regulators, central banks and market participants including Federal Reserve System, European Central Bank, Bank of England, People's Bank of China, and Bank of Japan, while engaging with industry stakeholders like SWIFT, Euroclear, Clearstream, LCH, and Depository Trust & Clearing Corporation.

History and Mandate

The committee was formed in 2005 when the Bank for International Settlements reconstituted the Committee on Payment and Settlement Systems to reflect expanded mandates linking payment systems to financial market infrastructures, responding to lessons from events such as the 1998 Russian financial crisis, the 2007–2008 financial crisis, and the collapse of institutions including Lehman Brothers and Long-Term Capital Management. Its mandate aligns with objectives set by summits including the G7 and the G20 to strengthen resilience, reduce systemic risk, and promote efficiency across infrastructures used by entities like Goldman Sachs, JPMorgan Chase, Morgan Stanley, Deutsche Bank, and UBS. The committee's remit is to formulate standards that interact with legal frameworks exemplified by instruments like the Uniform Commercial Code in the United States and directives in the European Union.

Organizational Structure and Membership

The committee comprises senior officials from central banks and supervisory authorities such as the Federal Reserve Board, Bank of Canada, Reserve Bank of Australia, Sveriges Riksbank, Swiss National Bank, Banco de México, and the Monetary Authority of Singapore, with representation drawn from jurisdictions represented in the International Monetary Fund and the World Bank constituencies. It reports to the Bank for International Settlements's Board and coordinates with the Basel Committee on Banking Supervision and the Financial Stability Board, while its secretariat is based in Basel and staffed by professionals with backgrounds in institutions like International Swaps and Derivatives Association, Committee on Payments and Market Infrastructures Secretariat, and national central bank research units. Membership criteria and working groups mirror structures used by bodies such as the Financial Stability Forum and the Committee on the Global Financial System, and sessions are typically convened alongside meetings of the International Monetary Fund and World Bank spring and annual meetings.

Policy Work and Key Publications

The committee publishes guidance, consultative reports and quantitative monitoring exercises including foundational documents akin to the Principles for Financial Market Infrastructures and technical papers on topics such as central counterparty resilience, liquidity management, recovery and resolution planning, and cyber resilience, often citing case studies from entities like Nasdaq, Hong Kong Exchanges and Clearing, Singapore Exchange, Chicago Mercantile Exchange, and Intercontinental Exchange. Key publications have addressed central bank real‑time gross settlement systems (drawing on designs from TARGET2, Fedwire, BOJ-NET), wholesale central bank digital currency experiments referenced in cases such as Project Jasper, Project Ubin, and e-krona, and interoperability initiatives related to SEPA and CLS Bank International. The committee's monitoring exercises and policy statements inform regulatory measures in jurisdictions governed by laws such as the Dodd–Frank Wall Street Reform and Consumer Protection Act and directives issued by authorities including the European Commission and the Financial Conduct Authority.

Standards and Regulatory Frameworks

Its standards framework, exemplified by the Principles for Financial Market Infrastructures, intersects with prudential standards promulgated by the Basel Committee on Banking Supervision and resolution frameworks developed by the Financial Stability Board and national statutes like the Bankruptcy Code (Title 11 of the United States Code), shaping requirements for capital, margin, liquidity, stress testing, and default management applied to organisations such as Central Counterparty Clearing Houses, securities settlement systems, and payment systems operated by firms like SWIFT, Euroclear, and national central banks. The committee's guidance on governance, risk management, settlement finality and collateral standards references precedents from cases such as Metallgesellschaft, Barings Bank, and regulatory responses exemplified by Basel III reforms, harmonizing international expectations while allowing for domestic implementation by authorities like the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.

Collaboration and International Engagement

The committee works closely with multilateral and regional organizations including the International Monetary Fund, World Bank, European Central Bank, Asian Development Bank, African Development Bank, and regional bodies such as European Securities and Markets Authority and Committee of European Banking Supervisors predecessors, as well as industry groups like International Swaps and Derivatives Association, Securities Industry and Financial Markets Association, and market utilities including CLS Bank International. It participates in cooperative initiatives with central bank experiments like Project Jasper, Project Ubin, and engages with technological forums like ISO technical committees, while liaising with national legislatures and regulators including United States Congress oversight and the European Parliament on legal frameworks affecting infrastructures.

Impact and Criticism

The committee's standards have materially influenced reforms in clearing and settlement worldwide, contributing to enhanced resilience at institutions such as LCH, CME Group, DTCC, Euroclear and national payment systems like TARGET2, yet have attracted criticism from academics and stakeholders including scholars from London School of Economics, Harvard University, and Massachusetts Institute of Technology for potential procyclicality, implementation costs borne by smaller firms, and perceived emphasis on centralization that may affect competition and innovation involving firms like FinTech providers and projects such as Libra (Diem), leading to debates in forums including the G20 and policy critiques in outlets tied to think tanks like the Brookings Institution, Peterson Institute for International Economics, and Centre for Economic Policy Research.

Category:International financial organizations