The Governor reviews the steps that have been taken to reduce the risks in the UK payments system, and in securities and foreign exchange settlement arrangements, and what more needs to be done. The introduction of real time gross settlement (RTGS) represents a fundamental improvement to the security of the payments system in this country. Likewise, the proposed RTGS system for payments throughout the European Union (TARGET) will reduce the risks in pan-European payments and support closer European economic and financial integration. Also, RTGS opens up the way to real-time final exchange of value
(delivery versus payment—DVP) in relation to securities and foreign exchange settlements. The Governor notes that for DVP in securities, we now have most of the individual bricks but have yet to build the wall. On foreign exchange risk, the Governor commends the recent G10 report, and notes that it proposes a three-point strategy to address foreign exchange settlement risk encompassing action by individual banks, by industry groups and by central banks.
Risk reduction in payment and settlement systems