Payment systems oversight
Together with the ECB and other Eurosystem central banks, we ensure system reliability and efficiency by monitoring, assessing and, if needed, initiating changes in the planned and already operating systems.
The importance of payment and securities settlement systems for financial system stability, capability to perform central bank functions and promotion of confidence in currency obligates the Bank of Lithuania to pay due attention to the management of risks to the systems as well as ensure their efficient operation.
Scope of system oversight
The Bank of Lithuania conducts oversight of CENTROlink and VPAS (securities settlement system). Together with the Eurosystem, the Bank of Lithuania participates in the oversight of TARGET2, STEP2 and TARGET2-Securities.
System oversight measures
The following system oversight measures are applied in Lithuania: system registration, system monitoring and system assessment pursuant to international principles, standards and recommendations.
Since 1 January 2015, when performing oversight of the payment and securities settlement systems, the Bank of Lithuania follows documents approved by the Eurosystem:
- Regulation on oversight requirements for systemically important payment systems
- ECB-approved Revised Oversight Framework for Retail Payment System
- Description of the procedures for payment and securities settlement systems oversight (69.5 KB ) harmonised with both previously mentioned documents
Cooperation with other institutions
The Bank of Lithuania, in conducting payment system oversight, cooperates with the ECB and the national central banks of the EU Member States which have adopted the euro. Where the operation of a system, which operates outside the Republic of Lithuania, is important for the Lithuanian market, the Bank of Lithuania, as an interested institution, may seek to participate in the oversight of such a system following an agreement with the competent authority responsible for the oversight of that system.
- Principles for financial market infrastructures
- Framework for the assessment of securities settlement systems and links to determine their eligibility for use in Eurosystem credit operations
Business continuity is the capability of continuing the operation without interruptions, even in a crisis.
Business continuity covers organisational, technical and staff management measures prepared in order to ensure the performance of essential operational functions in contingency situations. Business continuity in the financial sector is especially important for those institutions, whose uninterrupted operation influences the stability of Lithuania’s financial system.
Payment and securities settlement systems have a direct impact on the smooth functioning of financial markets and an indirect impact on each person who performs transfers of funds or securities settlement operations. Within a year, the total value of operations processed by the systems exceeds the national GDP several times. Therefore, system operators have to ensure business continuity, i.e. uninterrupted availability of settlement services.
General aspects of business continuity are described in international standards, recommendations and principles. The Bank of Lithuania oversees that system operators ensure smooth and uninterrupted operation of their systems and settlement processes.
At the end of 2015, the ECB, seeking to assess the preparedness of the Eurosystem to operate in contingency situations, carried out a large-scale market-wide business continuity exercise, simulating a cyber-attack. All central banks participating in TARGET2, the ECB, systemically important payment systems (EURO1, STEP2-T, CORE(FR)), 29 banks, the New York-based Continuous Linked Settlement System (CLS) and the Federal Reserve Bank were involved in the exercise.
More information on business continuity exercises is available in the ECB report.
We continuously assess how payment and securities settlement systems comply with the set requirements.
The Bank of Lithuania assesses CENTROlink and VPAS (a securities settlement system). Together with the Eurosystem, we participate in a joint assessment of TARGET2, STEP2-T and TARGET2-Securities.
System assessments (since 2010)
|Year||System assessed||Recommendations, principles and/or standards applied||Assessment results|
|2016–2017||CENTROlink||CPSS-IOSCO principles for financial market infrastructures|
|2014||Securities settlement system and its link with the securities settlement system of Clearstream Banking Luxembourg Plc., international securities depository operating in Luxembourg||Framework for the assessment of securities settlement systems and links to determine their eligibility for use in Eurosystem credit operations||Securities settlement system and the link are considered eligible for use in Eurosystem credit operations|
|2014||Securities settlement system||ESCB-CESR recommendations for securities settlement systems and recommendations for central counterparties in the European Union||System observed 16 out of 19 recommendations, broadly observed 2 (9th and 17th) recommendations, 1 recommendation (5th) was not applicable|
|2013||LITAS-RLS||CPSS-IOSCO principles for financial market infrastructures||9 out of 24 CPSS-IOSCO principles were not applicable to LITAS-RLS. System fully observed 9 principles, broadly observed 6 principles|
|2011||Securities settlement system||ESCB-CESR recommendations for securities settlement systems and recommendations for central counterparties in the European Union||System observed 15 out of 19 recommendations, broadly observed 3 (9th, 13th and 17th) recommendations, 1 recommendation (5th) was not applicable|