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Clearing and settlement systems and the Bank of Canada

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Abstract

Clearing and settlement systems are essential to the smooth functioning of a modern market-based economy such as Canada's. During the past decade, there have been significant efforts in Canada and abroad to improve electronic clearing and settlement systems that handle payments obligations, either uniquely or in conjunction with transactions related to the purchase and sale of a broad range of financial instruments such as debt, equity, foreign exchange, or derivatives. This article examines some of the risks faced by participants and end-users of these systems and reviews the Bank of Canada's role in relation to these systems. For a number of years, the Bank has been involved informally with major clearing and settlement systems with a view to ensuring that systemic risk is adequately controlled. In July 1996, the Payment Clearing and Settlement Act was proclaimed. This Act formalized the role of the Bank in the oversight of clearing and settlement systems for the purpose of controlling systemic risk. The article provides an overview of the Bank's responsibilities. It also describes certain new powers that the Act made available to the Bank that could be exercised in its dealings with clearing and settlement systems.

Suggested Citation

  • Clyde Goodlet, 1997. "Clearing and settlement systems and the Bank of Canada," Bank of Canada Review, Bank of Canada, vol. 1997(Autumn), pages 49-64.
    • Handle: RePEc:bca:bcarev:v:1997:y:1997:i:autumn97:p:49-64
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    Cited by:

    1. Khiaonarong, Tanai, 2003. "Payment systems efficiency, policy approaches, and the role of the central bank," Research Discussion Papers 1/2003, Bank of Finland.
    2. Khiaonarong, Tanai, 2003. "Payment systems efficiency, policy approaches, and the role of the central bank," Bank of Finland Research Discussion Papers 1/2003, Bank of Finland.
    3. Tanai Khiaonarong, 2004. "Payment systems efficiency, policy approaches, and the role of the central bank," Finance 0405004, University Library of Munich, Germany.
    4. Kim McPhail, 2003. "Managing Operational Risk in Payment, Clearing, and Settlement Systems," Staff Working Papers 03-2, Bank of Canada.
    5. Louis-Philippe Rochon & Sergio Rossi, 2011. "Monetary Policy Without Reserve Requirements: Central Bank Money as Means of Final Payment on the Interbank Market," Chapters, in: Claude Gnos & Louis-Philippe Rochon (ed.), Credit, Money and Macroeconomic Policy, chapter 6, Edward Elgar Publishing.
    6. repec:zbw:bofrdp:2003_001 is not listed on IDEAS

    More about this item

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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