The Riksbank’s oversight of the financial infrastructure

The Riksbank’s work on the financial infrastructure aims to promote a safe and efficient payment mechanism. The Riksbank's oversight focuses on monitoring and analysing the systems and ensuring that these comply with the demands placed by international standards on infrastructure companies.

The Riksbank applies the CPSS and IOSCO principles for financial infrastructures

In the oversight of the financial infrastructure, the Riksbank proceeds from the requirements for security and efficiency set in accordance with international standards. For infrastructure companies, there are the "Principles for financial market infrastructures" issued by the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO). The principles are minimum requirements, and the specific characteristics of the Swedish market may mean that the Riksbank needs to place higher requirements than those placed by the principles.

 

The principles also include requirements aimed at central banks and other authorities overseeing or supervising the financial infrastructure. The Riksbank therefore also applies the international principles to its own oversight work.

Criteria for identifying which systems should be overseen

The Riksbank has chosen to apply six criteria for identifying the systems that are to come under its oversight.

The assessment is based on

  • the number and value of the transactions handled by the system
  • the system's market shares
  • the markets on which the system is activet
  • he available alternatives that could be used at short notice
  • the presence of links with other systems and other financial institutions
  • the system's significance for the implementation of monetary policy

Systems assess themselves

The Swedish systems themselves assess how well they comply with the requirements in the "Principles for financial market infrastructures", in consultation with the Riksbank and Finansinspektionen. This takes place at least once every three years, or more often if the Riksbank and Finansinspektionen consider it appropriate. Based on the self-assessments, the Riksbank then makes its own assessment of appropriate areas for improvement to increase the safety and efficiency of the financial system. As a complement to the systems' self-assessments, the Riksbank makes an in-depth analysis of specific risks in the systems. The in-depth analysis results in an assessment by the Riksbank of whether there are any potential sources of systemic risks or efficiency losses.

The Riksbank exerts influence by communicating deficiencies in the systems

The Riksbank has no binding tools to influence participants in the financial system. Instead, the Riksbank primarily exerts influence by communication. In cases in which the Riksbank's analysis points to deficiencies in safety or efficiency, the Riksbank encourages the system owners to remedy these. This takes place in the form of public statements, speeches and publications, as well as in dialogue and meetings with the systems ('moral suasion'). The Riksbank's assessments of the stability and efficiency of the financial infrastructure are communicated via the annual Financial Infrastructure Report.

Cooperation with Finansinspektionen (the Swedish Financial Supervisory Authority) and authorities abroad

There are parts of the financial infrastructure that are included in both Finansinspektionen's and the Riksbank's supervision and oversight work, which means that the two authorities' areas of responsibility in some cases and to some extent overlap. In these cases, the two authorities endeavour to develop efficient forms for contacts and cooperation.

 

The stability of the financial infrastructure in Sweden may partially be dependent upon the safety and efficiency of foreign systems. The Riksbank therefore participates in oversight cooperation concerning these overseas systems. The oversight work is headed up by the domestic country's responsible authority (or authorities) and follows the guidelines for cooperation in the international principles drawn up by the CPSS and the IOSCO.

 

The Riksbank also takes part in international working groups within the Bank for International Settlements (BIS) and the European System of Central Banks (ESCB), which aim to reinforce the financial infrastructure in various ways.

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