1.1 The settlement of cross-border and multi-currency transactions currently raises significant systemic risk concerns owing to the very large daily volumes involved, the lack of simultaneous delivery of currencies and the interdependencies of payments system participants throughout the world. The BIS estimates that global foreign exchange market activity alone amounted to about $880 billion per day in April 1992. The settlement flows resulting from these and other international transactions represent a sizable share of the daily volume of many home-currency payments systems.
1.2 Central banks have expressed great interest, both individually and collectively, in reducing the risk in the settlement of foreign exchange and other cross-border and multi-currency transactions. In the press communiqué of November 1990 accompanying the publication of the Report of the Committee on Interbank Netting Schemes (Lamfalussy Report), the Group of Ten(G-10) central bank Governors requested that the Committee on Payment and Settlement Systems(CPSS) " continue to review possible measures that central banks might take - either individually or on a cooperative basis - to improve efficiency and reduce risks in the settlement of cross-border and multi-currency transactions".
1.3 The Working Group on Central Bank Payment and Settlement Services (Working Group)was established by the CPSS to examine possible options for central banks to improve efficiency and reduce risk in the settlement of cross-border and multi-currency interbank transactions. 1The Working Group has identified a number of options and established a framework for their evaluation based on central bank policy concerns. This report summarises the Working Group's findings and their implications for central banks. No specific option, or combination of options, is recommended. Instead, this report highlights the major benefits and concerns common to many possible options with the intention of contributing to future analysis and discussion.
Footnotes:
1. The members of the Working Group are listed in the Annex.
