Committee on Payments and Market Infrastructure

3 key takeaways

• The CPMI is an international body that sets standards to ensure the safety and efficiency of payment, clearing, and settlement systems.
• It works to enhance financial stability by monitoring and analyzing developments in the financial infrastructure.
• The CPMI collaborates with other international organizations to promote the implementation of its standards worldwide.

What is the Committee on Payments and Market Infrastructure?

The Committee on Payments and Market Infrastructure (CPMI) is a global standard-setting body established under the Bank for International Settlements (BIS). It aims to promote the safety and efficiency of payment, clearing, settlement, and related arrangements. These systems are vital components of the financial infrastructure, ensuring that money and financial instruments can be transferred securely and efficiently between parties. The CPMI conducts research, develops standards and guidelines, and monitors compliance to enhance the resilience and reliability of financial systems worldwide.

Importance of the Committee on Payments and Market Infrastructure

• Promotes Financial Stability: Ensures the robustness and resilience of payment, clearing, and settlement systems.
• Sets International Standards: Develops guidelines and standards that enhance the safety and efficiency of financial market infrastructures.
• Fosters Cooperation: Encourages international cooperation and coordination among central banks and other financial authorities.
• Enhances Transparency: Improves transparency and understanding of payment and settlement systems and their risks.
• Supports Innovation: Guides the safe adoption of new technologies and innovations in the financial sector.

How the Committee on Payments and Market Infrastructure works

The CPMI functions through a series of activities designed to support its mission of promoting safe and efficient financial market infrastructures. These activities include:

Standard Setting

The CPMI develops international standards and guidelines for payment, clearing, settlement, and related systems. These standards are aimed at reducing systemic risk and promoting the smooth functioning of financial markets. Notable standards include the Principles for Financial Market Infrastructures (PFMIs), which provide a comprehensive framework for the safe and efficient operation of these systems.

Monitoring and Assessment

The CPMI monitors the implementation of its standards and assesses the effectiveness of payment, clearing, and settlement systems globally. It conducts regular reviews and publishes reports on the state of these infrastructures, identifying areas for improvement and emerging risks.

Research and Analysis

The committee conducts research on various aspects of payment and market infrastructures. This includes studying trends, technological developments, and regulatory changes that could impact the safety and efficiency of these systems. The findings are used to update standards and provide guidance to member countries.

Collaboration and Outreach

The CPMI collaborates with other international organizations, such as the International Organization of Securities Commissions (IOSCO), the Financial Stability Board (FSB), and the International Monetary Fund (IMF), to ensure a coordinated approach to financial stability. It also engages with the private sector and other stakeholders to gather insights and promote the adoption of its standards.

Examples of the Committee on Payments and Market Infrastructure

• Principles for Financial Market Infrastructures (PFMIs): Comprehensive guidelines designed to ensure the safety and efficiency of payment, clearing, and settlement systems.
• Cyber Resilience Guidance: Standards and best practices to enhance the cyber resilience of financial market infrastructures.
• Reports on Digital Innovations: Analysis of emerging trends such as digital currencies and distributed ledger technology and their implications for payment systems.

Real world application

• Global Adoption of PFMIs: Many countries have adopted the CPMI-IOSCO Principles for Financial Market Infrastructures to enhance the resilience of their financial systems. For example, the European Union has incorporated these principles into its regulatory framework for financial market infrastructures.
• Cybersecurity Initiatives: Financial market infrastructures worldwide are implementing the CPMI’s cyber resilience guidance to protect against cyber threats. This includes enhancing their ability to detect, respond to, and recover from cyber incidents.
• Collaboration on Digital Currencies: The CPMI collaborates with central banks and other international organizations to study and guide the development of central bank digital currencies (CBDCs), ensuring that these new forms of money are safe and efficient.