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Financial market infrastructures and cashless means of payment

The infrastructures of the financial markets ensure the treatment of the financial flows exchanged between the actors of the financial systems.

Financial market infrastructures

There are several types of infrastructures which:

  • ensure the execution of transfer orders in optimal conditions of security and payment systems (Target2-Banque de France and CORE (FR) for France)) ;
  • ensure the effective settlement of transactions involving financial securities settlement systems (ESES France for France) via the common European settlement platform T2S ;
  • make it possible to centralise and better control counterparty risk clearing systems (LCH.Clearnet SA for France) ;
  • record transactions in order to ensure the transparency of financial markets Trade repositories – TR.
Target2-Interactions Target2-Interactions

The French financial market infrastructure landscape which comprises a large-value payment system (TARGET2-BF), a retail payment system (CORE(FR)), a clearing system (LCH.Clearnet SA) and a securities settlement system (ESES France), has undergone far-reaching changes since 2007:

  • The large-value payment systems TBF (Transfert Banque de France) and PNS (Paris Net Settlement) were replaced in 2008 by the unified European system TARGET2 (Trans-European Automated Real-time Gross settlement Express Transfer);
  • In the area of French retail payments, the SIT system was replaced by the new system known as CORE on 28 January 2008;
  • As regards securities settlement systems, ESES France carries out the settlement of financial instruments via the common European settlement platform T2S;
  • Clearing of financial instruments continues to be carried out by LCH.Clearnet SA.

Transactions in all of the French infrastructures are settled in central bank money at the Banque de France.

For their communication needs, French financial market infrastructures use the services provided by SWIFT. Founded in 1973, SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a cooperative society under Belgian law that provides standardised and secure messaging services for interbank transfers to more than 7,500 financial institutions in over 200 countries. SWIFT ensures the non-repudiation of payments, with the company executing the equivalent of a notarial deed for all of the transactions carried out.

Cashless means of payment

In contrast to banknotes and coins, cashless means of payment are instruments that allow the transfer of funds held in accounts by credit institutions, equivalent institutions (the Caisse des dépôts et consignations, the Treasury, the Banque de France etc.) and payment institutions following the remittance of a payment order.

In France, intensive use is made of cashless means of payment, in particular payment cards, which are appreciated for their ease of use and the fact that they are widely accepted.

The forthcoming completion of the Single Euro Payments Area (SEPA) will bring far-reaching changes to the retail payment market in France and Europe. SEPA will help to deepen European financial integration by providing the cash euro with its cashless counterpart. The resulting standardisation of means of payment will enhance the efficiency of payments and harmonise the processing of international and national payment orders.

Updated on: 06/07/2018 15:06