BIS' payments committee CPSS renamed CPMI

    The Committee on Payment and Settlement Systems (CPSS), one of the standing committees hosted by Swiss-based Bank for International Settlements (BIS, has been renamed as the Committee on Payments and Market Infrastructures (CPMI) to better reflect its actual activities, according to the BIS.
    The origins of CPSS date back to the late 1970 when central banks intensified their cooperation in international payment and settlement systems following the June 26, 1974 failure of the small German bank Bankhaus Herstatt.
    German regulators liquidated Herstatt but on that same morning banks in Frankfurt released payments in German marks to Herstatt in exchange for U.S. dollars that were scheduled to be delivered later that day in New York. But Herstatt's counter parties in New York never received their funds because of the time-zone difference. Herstatt was closed by regulators before dollar payments could be made during U.S. business hours.
    Central bankers then began work on how to avoid this so-called settlement risk in foreign exchange trading and in 1990 CPSS was set up as a permanent body to develop global standards. CPSS helped lead to the introduction of Real Time Gross Settlement Systems (RTGS), which ensure that payments between different banks in different time-zones are executed in real-time and are final.

Bank supervisors propose how to gauge intraday liquidity

    Banks must have enough liquid funds to make payments during extreme stress in financial markets and proposed indicators will allow supervisors to monitor banks' ability to live up to their obligations.

    The Basel III banking regulations, created in the aftermath of the 2008 financial crises, raised both the quality and quantity of banks’ capital. The reforms also included minimum standards for short-term liquidity but not intraday liquidity.

     Intraday liquidity is money that can be accessed real time, such as a bank’s reserves and collateral at a central bank and uncommitted credit lines.

    During the early phase of the financial crises in 2007, many banks ran into difficulties because they didn’t manage their liquidity properly, despite adequate capital, driving home the importance of liquidity to the proper functioning of financial markets and banks. A rapid switch in market conditions showed how quickly liquidity can evaporate.