CENTRAL BANKS ROLE IN CURRENT AND FUTURE PAYMENT SYSTEMS

In the past the issue of counterparty risk faced by banks in payment t ransfers was largely ignored. Now central banks are increasingly aware of such exposure and are designing risk management systems and approa ches to reduce risk. The guiding principle in this new thinking is tha t participating banks should have an opportunity to assess and determi nate the level of risk they are prepared to take and they should be ab le to anticipate and deal with problems arising in the transfer of pay ments. In the Euro area, the money market should operate as the market operate in individual countries today. Thus, the central banks will h ave to interlink their payment systems.