Brazilian Payment System

Transcription

1 May 11-14, 2010 Brazilian Payment System Joaquim K. Kavakama CEO ISO TC-68

2 Agenda Brazil Overview Degree of banking automation Brazilian payment system reform Operational Model Future Developments

3 Brazil Demographics 5th most populous country in the world 5th largest country by geographical area GDP 1 per capita 8,64 (thousand dolars) World s 8th largest economy by nominal GDP 2 9th largest by purchasing power parity 2 31 million people entered the middle class 20 million people crossed the poverty line But there are still big contrasts: Gini 3 index 0,56 4 There are only 8 countries in the world with a worse inequality income distribution 1Note: in Note: source World Bank Note: GINI index equal 1-complete inequality of income; equal 0-complete equality 4Note: source CIA Report 2009

4 Brazil Macroeconomics Foreing reserves US$ 200 billion Basic interest rate (SELIC) 9,50% Foreing debts US$ 200,9 billion 1 3rd major agricultural exporter in the world Vale Group world s largest Iron Ore Producers 2 Brazilian Banks among the 20 largest in the world Reneable fuel technology Ethanol from sugar-cane One of the world s best at exploiting deep-sea oil deposits Pre-Salt Reservoirs plan to produce 5,7 million barrels of oil and gas per day by Note: estimate for January/2010 source: Brazil s Central Bank

5 Brazil on spot 2014 World Cup 2016 Olimpic Games in Rio de Janeiro

6 Degree of banking automation

7 from 1980 to 1994 Hiperinflation

8 from 1995 Real Plan Inflation

9 Hiperinflation Information and speed = money The Banking system to survive: Invested heavily on IT high developed banking authomation system Cheques are cleared nationwide: In ONE day if > US$ In TWO days otherwise ATMs provide hundreds of different services Internet banking also provides several transactions and convenient access

10 Brazilian Payment System Reform Why? In the 90 s Brazil had a domestic financial crisis similar to the 2008 World Financial Crisis Many banks were insolvent and the Central Bank had to rescue the system injecting liquidity Then, compliant to BIS 1 principles, the Central Bank fostered the reform aiming to mitigate sistemic risk A law was passed creating Central Counterpart figure. 1Note: Bank for International Settlements

11 Brazilian Payment System Reform (CONT ) Brazil Central Bank implanted RTGS system CIP was created to clear and settle interbank payments optimizing liquidity Securities settlement systems implemented DvP FX clearing was created with PvP concept and is a Central counterpart

12 SPB Brazilian Payment System Central Bank of Brazil Cielo CIP Câmara Interbancária de Pagamentos SITRAF SILOC TECBAN Selic Redecard Funds transfers Hybrid (T0) Funds transfers DNS (T1) MasterCard Government securities Compe RTGS Cheques DNS (T1) STR Funds transfers RTGS R S F N CETIP Corporate bonds, swap, others DNS (T0) RTGS Settlement accounts Derivatives Commodities, futures, swap DNS (T1) Securities Government securities DNS (T0, T1) FX Inter-bank foreign exchange DNS (T1, T2) CBLC Stock, corporate bonds DNS (T1, T3) RTGS BM&FBOVESPA Source: Banco Central do Brasil; redrawn by CIP

13 Project History Collaboration Central Bank Clearing Houses MECIR Bank Associations

14 Governance Project History

15 Operational Model Overview The National Financial System Network - RSFN is a private network used for Brazilian Payment System- SPB Security based on Cryptrography and Digital Signature Messaging protocol jointly designed by WGs. Standard message format is XML with schemma.

16 Operational Model Overview Message structure All messages are comprised by 3 segments: Header Area mandatory group of fields with contain identification, reference date and message controls Transaction Area All information regarding transaction. User Area Extension area to be used by counterparties if further information is necessary and not available at Transaction area. The content must be negotiated between participants.

17 Future Developments BRAIN Association created to foster Brasil as an investment and financial HUB in South America or even Latin America; INTEROPERABILITY - CIP will be an IPF Gateways for Brasil, connecting to other Countries using ISO and compliant with IPFA rule book. TC68 and SC7 brazilian mirror structure in defiinition fase

18 Future Developments ISO CONVERGENCE EVALUATION: 1 st FASE - In May 2010 WG Messaging meeting, a project to document brazilian domestic message using ISO structure will be presented. 2 nd FASE - after the documentation process, an ISO and the brazilian standard will be made. 3 rd FASE - depending on ROI, some message groups may be selected to be converted to ISO

19 Thank you Joaquim Kiyoshi Kavakama

20 IPFA Concepts Euro Domestic Formats & Rules Member Association Rules and Procedures ISO Standard Format Member Domestic Formats & Rules US dollar Association Association Customer Financial Institution Clearing & Settlement Mechanism Clearing & Settlement Mechanism Financial Institution Customer Customer Financial Institution Financial Institution Customer Customer Intermediary Financial Institution There can be one or more entry points into or out of any country. The domestic ACH Rules & Formats are not impacted by IPFA Rules and Procedures. Intermediary Financial Institution Customer

21 FI CAD CSM Goal of the IPFA $ CSM CSM RUB FI MXN CSM CSM INR ARS BRL AED FI IPFA Standard Bridge Format ISO ZAR CSM CSM IPFA Bridge Format Eliminates the need to map to each domestic format Does not change the domestic payment rules Members exchange payments based on a common set of rules and procedures AUD FI IPFA Participant Members: Clearing & Settlement Mechanisms (CSMs) and Financial Institutions (FIs) Entry points into countries may be CSMs or FIs or both There can be one or more entry points into or out of any country. 26