CPSS Full Form - Committee on Payment and Settlement Systems

by Shashi Gaherwar

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The Committee on Payment and Settlement Systems: Strengthening Global Financial Infrastructure

The Committee on Payment and Settlement Systems (CPSS), now known as the Committee on Payments and Market Infrastructures (CPMI), is a pivotal international body under the Bank for International Settlements (BIS). It strengthens global financial stability by setting standards for payment, clearing, and settlement systems.

The Committee on Payment and Settlement Systems: Strengthening Global Financial Infrastructure

This article explores the CPSS/CPMI’s objectives, functions, and challenges in the evolving financial landscape.

What is the Committee on Payment and Settlement Systems?

The CPSS, renamed CPMI in 2014, is a standard-setting body focused on enhancing the safety and efficiency of payment, clearing, and settlement systems. These systems ensure seamless fund and securities transfers, critical for financial markets. Hosted by the BIS, it includes 27 central banks as of 2023.

[](https://en.wikipedia.org/wiki/Bank_for_International_Settlements)

Objectives of the CPSS

The CPSS/CPMI aims to:

Promote Financial Stability: Secure systems reduce systemic risks.
Set International Standards: Ensures uniform financial transactions.
Facilitate Cooperation: Fosters central bank collaboration.
Enhance Transparency: Improves risk management and information-sharing.
Mitigate Settlement Risks: Addresses credit, liquidity, and operational risks.

Key Functions of the CPSS

The CPSS/CPMI performs critical roles:

Developing Standards: Key frameworks include:
- Principles for Financial Market Infrastructures (PFMI, 2012): Risk management for systemically important systems.
- Core Principles for Systemically Important Payment Systems (2001): Guidelines for large-value systems.
- Guidance on Cyber Resilience (2016): Protects against cyber threats.
Monitoring Trends: Analyzes digital payments, fintech, and cross-border transactions, publishing reports like Red Books.
Enhancing Cross-Border Payments: Collaborates with IMF, World Bank, and FSB to improve efficiency and security.
Reducing Settlement Risks: Promotes real-time gross settlement (RTGS) and central counterparty (CCP) mechanisms.

CPSS and the Bank for International Settlements

The CPSS/CPMI, hosted by the BIS, aligns its standards with global best practices under BIS oversight. It reports to the Global Economy Meeting (GEM), ensuring coordination with central banks worldwide.

[](https://www.bis.org/press/p140901.htm)

Challenges and Future Directions

The CPSS/CPMI faces evolving challenges:

Digital Currencies and Fintech: Adapting to cryptocurrencies, CBDCs, and DeFi requires new regulations.
Cybersecurity Threats: Growing digitalization demands robust cyber resilience frameworks.
Financial Inclusion: Enhancing payment access in developing economies.
Harmonizing Regulations: Aligning global frameworks to streamline cross-border payments.

The CPSS/CPMI is vital for global financial stability, setting standards, monitoring trends, and mitigating risks. As digital innovations and cybersecurity challenges reshape finance, it remains pivotal in ensuring resilient payment and settlement systems.

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