1. What is a payments system?

Payment systems

1. The payment system, in the broadest sense, is a set of systems through which funds are transferred.

The payment system has one of the basic roles for maintaining financial stability, since it enables the circulation of funds. Therefore, the stability of payment systems is very important for any economy.

According to the Law on the Central Bank of BH, reading: "The basic tasks of the Central Bank performed under the authority of its Governing Board are: to assist or to establish and maintain the adequate payments and accounting systems”, Central Bank of Bosnia and Herzegovina has established the systems through which interbanking payments in KM are carried out in BH.

System of interbanking clearing and settlement is organized through two payment systems, run by the Central Bank of BH. These are the systems: gyro clearing and real time gross settlement system.

Gyro clearing is system of interbanking bilateral and multilateral clearing for the transactions in the amount less or equal to 10,000.00 convertible marks. Clearing is performed in four daily cycles.

Real time gross settlement, RTGS, is a system of interbanking settlement used for transactions above 10,000.00 convertible marks, and for lower amounts the use is optional. In question is a system carrying out the settlement of payments orders between the participants in real time, i.e., the transactions via RTGS are carried out immediately (if there is coverage for them at the settlement account).

The system features the participants having the licence for performance of payments operations, and the Central Bank of Bosnia and Herzegovina, as well.

The Central Bank of BH controls and monitors the performance of both systems and monitors the actions of participants in both systems.

The Central Bank of Bosnia and Herzegovina had important role in the reform of payment operations in BH. With the modernization of the payment operations in 2001, there has been important upgrades, seen in the higher speed of transactions transfer, decrease of costs and adoption of European standards. This reform meant that the payment operations were moved from then payment bureaus in commercial banks and the Central Bank of Bosnia and Herzegovina. By this reform the Central Bank of Bosnia and Herzegovina has established the a.m. systems, through which interbanking payments transactions are carried out. By the beginning of 2007, BH was assigned IBAN (International Bank Account Number). With the introduction of the international standard for account numbering, banks in Bosnia and Herzegovina were enabled to have formal inclusion in the system of automatic processing of foreign currency payment orders within the European Union (EU).

The Central Bank of Bosnia and Herzegovina continuously works on preservation of payment systems stability, and the availability of those is at the level of app. 100%. Follow up of trends and modernization of those is also one of the primarily goals, thus the new gyro clearing, adjusted with ISO 20022 and SEPA standard, was successfully completed in 2019 and put in live operation.

Reliable functioning of payment systems in the country provides the payment between all entities to be in time and efficient, and through this system, more than 40 million transactions are performed annually in the total value of over KM 100 billion. More at: https://cbbh.ba/Content/Read/1058

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