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PAYMENT SYSTEM

Payment and settlement systems play an important role for the stability and efficiency of the financial sector and the economy of the country as a whole. Moreover, the implementation of monetary policy in the country depends on the existence of reliable and effective market infrastructures. Payment systems are the means by which funds are transferred through banks, as well as a major channel by which shocks might be transmitted across domestic and international financial systems and markets. Robust payment systems are, therefore, a key requirement in maintaining and promoting financial stability. Safe and efficient payment systems are critical to the effective functioning of the financial system.

Role of Bank of Albania

Promoting the smooth operation of payment systems is, therefore, a principal task of the Bank of Albania. For the fulfilment of this task, Bank of Albania applies at least three different approaches:

  • takes an operational role – BoA provides settlement means for payments; it runs a large value payments system in domestic currency (AIPS - Albanian Interbank Payment Systems), an automated clearing system for the netting and clearing of payments (credit transfers and direct debits) in domestic currency (AECH - Albanian Electronic Clering House);
  • conducts oversight activities – BoA sets standards and regulations with a view to ensuring sound and efficient systems for processing transactions in ALL, as well as assesses the systems against these standards; and
  • acts as catalyst – BoA promotes efficiency across payment systems and payments instruments.

The Bank of Albania has a major role and commitment in developing the national payment system, particularly because of its strong interest in financial stability, its concern to ensure the proper functioning of the banking and financial system, and its principal function to implement the country’s monetary policy.

Payment instruments are cashless means of payment, such as credit transfer, direct debit, payment card, cheque and promissory note. These instruments allow the transfer of funds, held in accounts opened with banks, between the payer and the payee, based on the receipt of a payment instruction.

The payment transaction consists on the initiation, validation and transmission of a payment instruction. Based on the payment instrument type, the instruction may be initiated by the debtor (credit transfer, payment card, etc.) or by the beneficiary (direct debit, cheque, etc.).

During the clearing and settlement of transactions, banks exchange among themselves the claims arising through these payment instruments, via the systems (for small value payments or large value payments) and settle the net amount of these reciprocal claims via AIPS.

A payment system is a set of instruments, procedures and rules for the transfer of funds among participants (credit or financial institutions) in the system, relying on an agreement between the participants in the system and the system operator. The funds transfer is performed via an agreed upon technical infrastructure (Source: CPSS report titled Core Principles for SIPS, January 2001).

In Albania there are two inter-bank payment systems owned and operated by BoA: a real time gross settlement system (AIPS) and a retail payment system (AECH). In addition, Bank of Albania owns and operates the central system on settlement and registration of securities – AFISaR, which serves as the cenral depository of the securities issued by the Albanian government. 

BoA is providing facilities for net settlement (manually processed) of cheques and cards payments (VISA and MasterCard) in domestic currency, as well as the settlement of cash leg for Governments Securities transactions (bills and bonds denominated in domestic currency).

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