Payments and Settlements
Payment Systems are considered an important pillar in the financial market infrastructure. Accordingly, the Central Bank of the UAE leads the establishment, development, operation and oversight of the payment systems in the UAE. The different services of these financial infrastructure systems are offered to participating institutes, which extend such services to their different customers.
The Central Bank of the UAE owns, operates and manages the following payment systems, categorized into Large-Value Payment Systems (LVPS) and Retail Payment Systems (RPS):
The UAE Funds Transfer System (UAEFTS)
The Image Cheque Clearing System (ICCS)
The UAE Wages Protection System (UAEWPS)
The UAE Switching System (UAESWITCH)
The UAE Direct Debit System (UAEDDS)
The UAE Payment Gateway System (UAEPGS)
Innovation: Aber (Joint Digital Currency and Distributed Ledger Proof of Concept)
Project Aber was an initiative launched by the CBUAE and Central Bank of Saudi Arabia (SAMA) to explore the viability of a dual-issued single digital currency as an instrument of domestic and cross-border settlement between the two countries. The two Central Banks have completed project Aber and issued a final report on their findings.
The high-level objectives of this initiative were:
- To explore, experiment, and gain a deeper understanding of distributed ledger technology (DLT) and analyse its maturity;
- To explore an alternative DLT-based cross-border payment solution that can overcome inefficiencies in existing cross-border interbank payment systems;
- To understand and experiment with the dual issuance of a Central Bank digital currency; and
- To benchmark findings against those of other Central Banks.
Payment and Settlement Systems
A payment system can be considered as an arrangement based on a formal agreement governing a group of participating members, established on an identified set of rules and standardised measures for the transmission, clearing, netting and/or settlement of monetary obligations arising between its members.
This arrangement might also include the payment system operator as well as the settlement institute – which, in some instances, can be the same entity. In the case of CBUAE-owned payment systems, as described in the following sections, the CBUAE is currently both the operator and the settlement institute.
Generally, payment systems can be categorised into two types - those handling critical and large-value payments, and others that handle low-value (retail) ones.
These two categories are better known as Large-Value Payment Systems (LVPS) and Retail Payment Systems (RPS).
The CBUAE owns, operates and manages the following payment systems:
Large-Value Payment Systems (LVPS)
A Large Value Payment System (LVPS) is a funds transfer system through which large-value and/or high-priority funds transfers are made between the participating entities (Participants) in the system for their own account, or on behalf of their customers. The CBUAE owns and operates such a system known as the UAE Funds Transfer System (UAEFTS).
Retail Payment Systems
A Retail Payment System (RPS) typically handles a large volume of relatively low-value payments in such forms as cheques, credit transfers, direct debits and card payment transactions. The CBUAE owns, operates and manages the following Retail Payment Systems:
A cross-border payment system facilitates payments where the financial institutions of the payer and the payee are located in different jurisdictions. Membership and participation in the system follow an agreed set of participation requirements, rules and specified standards that govern the relationship between the participants and the business rules affecting the related transactions, such as the currency or currencies of transaction, the exchange rate and the settlement institute.
Two of the main cross-border payments in the region are AFAQ and Buna.
Research and Statistics
The CBUAE has a dedicated function to gather accurate, insightful and up-to-date data on the UAE’s financial and monetary system.
The mandate of the Research and Statistics Department (RSD) is to compile and produce quality data in a timely manner, in line with internationally-recognised methods. Providing access to actionable economic research and analysis to support appropriate decision-making across the financial and monetary sector.
Regarding The Regulation For The Controls Of Allowing Banks Operating In The Country To Establish Banking Service Units Staffed By Banking Service Advisors
Last updated on: Wednesday 07 June 2023
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