According to a report jointly prepared by the Center for Latin American Monetary Studies (CEMLA) and the World Bank in 2000, the Argentine central bank (BCRA) redefined the regulatory and operational framework for payment systems and took the lead in implementing payments reforms in 1996. Per the 2002 CEMLA/World Bank report, these reforms include the creation of a real-time gross settlement system, the Electronic Payment Means, operated by the central bank; the privatization of automated low-value clearinghouses throughout the country; and the development of large value automated clearinghouses owned and operated by the private sector. The Argentine Interbank Commission for Payment Means of the Republic of Argentina (CIMPRA) was created in the mid-1990s to manage the development of the National Payment System plan, coordinate its implementation, and implement future improvements in the payment systems. CIMPRA is the forum in which the various players in the system (BCRA, banks, bank associations, and automated clearinghouses) study, plan and monitor the performance of payment systems. However, there is insufficient information publicly available as to Argentina's compliance with the Core Principles for Systemically Important Payment Systems.

General Overview

According to a 2000 report by the Center for Latin American Monetary Studies (CEMLA) and the World Bank in 1996 (CEMLA&WB 2000), Argentina instituted a series of payment systems reforms aimed at improving stability and efficiency. These reforms included: "(1) the setting up of the Electronic Payment Means (Medio Electrónico de Pagos, or MEP) system, which is a real time gross settlement (RTGS) system; (2) a consolidation and privatization of low value automated clearinghouses across the country; and (3) the development of large value automated clearinghouses managed and owned by the private sector" (pp. 6-5). However, there is little information publicly available that directly addresses Argentina's compliance with the Core Principles for Systemically Important Payment Systems (CPSIPS). Nevertheless, the CEMLA and World Bank 2003 report and the 2001 report by Cirasino and Guadamillas indicated that Argentina was making progress toward compliance with the CPSIPS.

Per the 2006 Central Bank of Argentina (BCRA) report, there are four electronic clearing houses managed by financial institutions and an online transaction system known as the MEP. Authorized institutions can have long operational cycle transfers in real time and information access on their current accounts at the BCRA by means of the MEP system (BCRA n.d. a).

The CEMLA&WB 2000 report explains that the core of the regulatory legal framework is the Financial Institutions Law, which states that the BCRA has regulatory and supervisory authority over clearing houses and other institutions that provide payment systems. Other relevant pieces of legislation and regulation are the Checks Law, which deals with checks transactions, and the BCRA´s Charter and by-laws. The BCRA requires clearing houses to comply with standards on operation, security, telecommunication infrastructure, and emergency situations. The Superintendency of Financial and Exchange Institutions (SEFyC) is in charge of ensuring that these requirements are fulfilled (BCRA n.d b).

The Principles

I. The system should have a well-founded legal basis under all relevant jurisdictions.

II

Based on the CEMLA&WB 2000 report, the Law on Financial Institutions indirectly grants the BCRA regulatory and supervisory powers over clearing houses and similar entities engaged in payment settlement. Another relevant law is the Checks Law, which addresses the transactions and payments made using checks and the corresponding rights and conditions that the parties involved in this kind of transactions have. The Charter and by-laws of the BCRA complete the legal framework of payments system. However, there is insufficient information publicly available as to Argentina's compliance with this principle.

II. The system's rules and procedures should enable participants to have a clear understanding of the system’s impact on each of the financial risks they incur through participation in it.

II

There is insufficient information publicly available as to Argentina's compliance with this principle.

III. The system should have clearly defined procedures for the management of credit risks and liquidity risks, which specify the respective responsibilities of the system operator and the participants and which provide appropriate incentives to manage and contain those risks.

II

There is insufficient information publicly available as to Argentina's compliance with this principle. The CEMLA&WB 2000 report notes that the MEP is a RTGS system, but it does not provide intraday liquidity or payment queues. However, the fluidity of the payments is achieved through the liquidity requirements that banks must hold. According to the report, rediscount facilities and cash advances to alleviate the situation of an illiquid bank are provided by the BCRA. This amount should not exceed the net capital of the entity. However Law No. 24.485 of 1995 on Bank Deposits Insurance System allows the BCRA to grant loans that surpass this limit in the case of systemic liquidity problems. These operations are triggered by the banks since the BCRA does not have an active participation on the banking liquidity system.

M. Delfiner et al. wrote in 2006 that the BCRA's 1995 Communication "A" 2374 lays out procedures to manage liquidity risks. A future phase of the Communication contemplates the definition of liquidity reserve coefficients, which necessitated the elaboration of the so-called "informative regimes" by financial entities. In February 2002, during the economic crisis, this Liquidity Position Informative Regime was suspended and it was finally cancelled in January 2006.

IV. The system should provide prompt final settlement on the day of value, preferably during the day and at a minimum at the end of the day. (Systems should seek to exceed the minima included in this Core Principle.)

II

The 2006 BCRA report mentions that the Argentinean RTGS system called MEP was introduced in 1997. The system allows transfers among commercial banks through their accounts at the BCRA. The operative cycles extends from 8am to 8pm. However, there is insufficient information publicly available directly addressing Argentina's compliance with this principle.

V. A system in which multilateral netting takes place should, at a minimum, be capable of ensuring the timely completion of daily settlements in the event of an inability to settle by the participant with the largest single settlement obligation. (Systems should seek to exceed the minima included in this Core Principle.)

II

According to the CEMLA&WB 2000 report "payments are settled on an end-of-day net basis through private clearing houses" (p. 66). However, there is insufficient information publicly available directly addressing Argentina's compliance with this principle.

VI. Assets used for settlement should preferably be a claim on the central bank; where other assets are used, they should carry little or no credit risk and little or no liquidity risk.

II

Per the CEMLA&WB 2000 report "interbank payments may be settled on a gross basis through the MEP or, alternatively, on an end-of-day net basis through one of the private clearinghouses" (p. 66) Banks and clearing houses manage entirely the settlements procedures. Banks have full responsibility on their funds because the BCRA is never permitted to execute a payment to the banks' accounts, However, there is insufficient information publicly available directly addressing Argentina's compliance with this principle.

VII. The system should ensure a high degree of security and operational reliability and should have contingency arrangements for timely completion of daily processing.

II

The CEMLA&WB 2000 report describes that the payments system is based on a communications regime that does not allow encryption and authentication. Therefore, the BCRA had to establish rules and requirements to ensure operational and security reliability. The MEP requires that payments to be sent to the system are first loaded in the system and then approved by an employee of the bank. Furthermore a contingency plan has been established in case the MEP system suffers transmission problems caused by central computer failure or equipment failure in the member banks. However, there is insufficient information publicly available directly addressing Argentina's compliance with this principle.

VIII. The system should provide a means of making payments which is practical for its users and efficient for the economy.

II

There is insufficient information publicly available directly addressing Argentina's compliance with this principle. The CEMLA&WB 2000 report states that a working group was established in 1995 to reform the "old" interbank system. A number of guidelines were issued on: "(1) Widespread adoption of new technologies, both for customers and interbank payments; (2) Creation of interbank nation-wide systems specialized by the types of payments processed (e.g., large or low-value); and (3) Enhancement of the financial soundness and the operational reliability of systems by the enforcement of risk control measures in the clearing systems and the implementation of a real-time gross settlement system" (p. 33).

The 2006 report by the BCRA states that the Uniform Federal Clearing (CFU) scheme, in operation since July of 2005, allows electronic and simultaneous clearing of low value transactions. The check's threshold value was increased from Ar$ 3000 to Ar$ 5000. Ninety percent of issued checks are defined as of low value. As a result, entities could reduce their operating costs and users be benefited from the optimization of the process, the decrease in operating risk, and improvements in countrywide interconnectivity.

IX. The system should have objective and publicly disclosed criteria for participation, which permit fair and open access.

II

BCRA regulations do not discriminate among members with regard to access requirements or the applicability of rights and fees. Per the CEMLA&WB 2000 report, the BCRA sought to facilitate the use of MEP by eliminating fees for the services provided by the system. This measure is only provisional. However, there is insufficient information publicly available directly addressing Argentina's compliance with this principle. According to the BCRA's 2007 report, the Interbank Commission for Payment Means of the Republic of Argentina (CIMPRA) is in charge of the development of the National Payment System. The entity is integrated by the BCRA, Banco de la Nacion Argentina, Banco de la Ciudad de Buenos Aires, and a group of professional associations. CIMPRA's objective is to encourage the active participation of its members in the development of the rules of the system.

X. The system's governance arrangements should be effective, accountable and transparent.

II

There is insufficient information publicly available as to Argentina's compliance with this principle.

A. The central bank should define clearly its payment system objectives and should disclose publicly its role and major policies with respect to systemically important payment systems.

II

As described by the CEMLA&WB 2000 report, the BCRA actively participates in the payment system by providing and managing a RTGS, by defining ex-ante the regulatory framework, and by supervising private clearing houses and the overall sector system through the SEFyC. Furthermore, the BCRA provides direct services such as countrywide cash distribution, maintenance of banks' current accounts through which interbank payments and clearing systems' balances are settled, and management of cross border payments. However, there is insufficient information publicly available directly addressing Argentina's compliance with this principle.

The BCRA sets forth the regulatory framework that Clearinghouses must follow in order to provide electronic clearance services. These requirements deal with the following topics: (1) operational capacity; (2) security conditions; (3) telecommunications infrastructure; and (4) contingency plan. Compliance with the regulation is supervised by the SEFyC (BCRA n.d b).

B. The central bank should ensure that the systems it operates comply with the Core Principles.

II

The BCRA sets forth the regulatory framework that Clearinghouses must follow in order to provide electronic clearance services. These requirements deal with the following aspects of it: (1) operational capacity; (2) security conditions; (3) telecommunications infrastructure; and (4) contingency plan. Compliance with the regulation is supervised by the SEFyC (BCRA n.d b). However, there is insufficient information publicly available directly addressing Argentina's compliance with this principle.

C. The central bank should oversee compliance with the Core Principles by systems it does not operate and it should have the ability to carry out this oversight.

II

The BCRA sets forth the regulatory framework that Clearinghouses must follow in order to provide electronic clearance services. These requirements deal with the following aspects of it: (1) operational capacity; (2) security conditions; (3) telecommunications infrastructure; and (4) contingency plan. Compliance with the regulation is supervised by the SEFyC (BCRA n.d b). However, there is insufficient information publicly available directly addressing Argentina's compliance with this principle.

D. The central bank, in promoting payment system safety and efficiency through the Core Principles, should cooperate with other central banks and with any other relevant domestic or foreign authorities.

II

There is insufficient information publicly available directly addressing Argentina's compliance with this principle. According to the CEMLA&WB 2000 report, the BCRA (as a member of the Latin America Integration Association), must strengthen its relations and facilitate payments with the other central banks in the region.