The Sistema de Pagos de Alto Valor (SIPAV) is the large-value, time critical payment system in Bolivia. This interbank payment system was launched in 2001 as a real-time gross settlement system by the country's central bank, the Central Bank of Bolivia (BCB). A joint 2006 report by the Center for Latin American Monetary Studies and the World Bank implies that Bolivia considers the SIPAV a systemically important payment system. The SIPAV is owned, operated and overseen by the BCB. There is, however, little publicly available information that addresses Bolivia's compliance with the Core principles for Systemically Important Payment Systems promulgated by the Committee on Payment and Settlement Systems.

General Overview

The 2007 International Monetary Fund (IMF) Article IV consultation report on Bolivia confirms that a large-value gross settlement payment system has been implemented in the country. It is the Sistema de Pagos de Alto Valor (SIPAV). However, it has not been identified as the country's systemically important payment system. Nevertheless, a report jointly prepared by the Center for Latin American Monetary Studies (CEMLA) and the World Bank (WB) and reprinted in English in 2006 does imply that Bolivia considers the SIPAV to be a systemically important payment system when it states that "since its very beginning, it was foreseen that the SIPAV should comply with the Core Principles for Systemically Important Payment System" (p. 31). The report goes on to enumerate the features incorporated into the SIPAV to achieve this aim. Firstly, only banks and other financial institutions authorized by the Central Bank of Bolivia (BCB) are direct participants in the SIPAV with direct access. Access criteria of the system are non-discriminatory and transparent. Secondly, operational procedures are practical, speedy and efficient, with appropriate safety controls, so as to optimize time and resources. Thirdly, the system grants autonomy to its participants in the management of their accounts. Fourthly, transactions are settled on a real-time gross settlement basis. The technology of the SIPAV supports safe, efficient and practical messaging of transaction information. Further, the system has mechanisms to provide automatic liquidity facility to its participants. Payments in the system are final and irrevocable. The system also endeavors to reduce and contain systemic risk as well as other risks to promote its stability. The SIPAV allows interconnection between its participants and external systems so as to promote settlement through the SIPAV. Finally, the use of the system enables the reduction of transactional costs.

Under the Law of the Central Bank of Bolivia, the BCB is "the only...payments system authority of the country..." (p. 16). The 1998 Property and Credit Law amended the Law of the BCB, stipulating that the BCB would frame payment system policies to fulfill its ultimate objective of maintaining monetary stability in the country. Under the newly granted power by the 1998 law, the BCB embarked on the modernization of the national payments system. In 2001, the BCB launched the country's first Large-Value Payment System, SIPAV, through the BCB Board of Directors Resolution No. 70 of 2001. The SIPAV, which is a real-time gross settlement (RTGS) system, allows banks to process inter-bank payments electronically and in real-time. Resolution No. 70 of 2001 also grants the BCB the authority to regulate the SIPAV's operations and establish the rights and responsibilities of the participants in the system. Under the Property and Credit Law, the BCB became the operator of the SIPAV. The Law of the Central Bank of Bolivia, as modified by the Law of Banks and Financial Institutions, validates electronic transfers made through the system and allows the BCB to regulate digital signature. The 2001 Resolution was updated by the passage of Resolution No. 166 of 2004. As the CEMLA/WB report observes, the "different large value payments system services that the BCB provides shall be complemented by new developments which will allow to structure a payments integral system, as well as to increment the safety and efficiency of the payments systems as a whole" (p. 7). Further, the private sector in Bolivia is also a major contributor to the modernization of the payment systems in the country. Private initiatives aimed at developing the payment systems, such as electronic transfers made through the Automated Clearinghouse (ACH) system, have been actively supported by the BCB through its coordination with the Association of Private Banks of Bolivia (ASOBAN).

Apart from the SIPAV, the BCB also launched the Treasury Payment System (SPT) in 2002 in conjunction with the National Treasury (TN) to process government payments and salaries of government and certain public sector employees. These payments are made predominantly in Bolivian currency (Bolivianos, or BOB). The retail payments systems in the country are regulated by the BCB through the Regulation of Electronic Clearinghouses and Clearing and Settlement Services issued under the provisions of the Law of the BCB and the Law of Banks and Financial Institutions. The Regulation regulates the creation, incorporation, and operation of retail payment systems and their clearinghouses. The Check Clearinghouse is a privately operated payment system managed by Administradora de Camaras de Compensacion y Liquidacion S.A. (ACCL S.A.), which is majority owned by the ASOBAN. The ACCL S.A. has been operational since 2004. Payments in this system are settled on a net multilateral basis and settled at the BCB using the current accounts and legal reserves held by the participating banks and the settlement account of the ACCL S.A. The 2006 CEMLA/WB report, at the time, mentioned an ACCL S.A. project underway that was expected to launch the ACH, thereby enabling electronic fund transfers through the financial sector entities and the TN.

The Principles

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

II

There is insufficient information publicly available as to Bolivia's compliance with this principle. According to the 2006 CEMLA/WB report, the SIPAV was launched in 2001 through the BCB Board of Directors Resolution No. 70 of 2001. Resolution No. 70 also grants the BCB the authority to regulate the SIPAV's operations and establish the rights and responsibilities of the participants in the system. Under the Property and Credit Law, the BCB became the operator of the SIPAV. The Law of the Central Bank of Bolivia, as modified by the Law of Banks and Financial Institutions, validates electronic transfers made through the system and allows the BCB to regulate digital signature. The 2001 Resolution was updated by the passage of Resolution No. 166 of 2004.

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 Bolivia's compliance with this principle. Per the 2006 CEMLA/WB report, BCB Resolution No. 70 of 2001 establishes the rights, obligations and responsibilities of the participants in the SIPAV. Further, the participants are bound by two significant agreements signed individually between them and the BCB. One is the Participant Agreement in the Large Value Payment System , in which "the obligations, responsibilities and rights of the participants and administrator are established" (p. 8), and the other is the Credit Line Opening Agreement that "defines the conditions under which the BCB shall grant intraday credits to the system participant" (p. 8). Further, under the terms and conditions of the Interbank Network Use Agreement signed between the BCB and the ASOBAN, the SIPAV utilizes the communications network operated by the ASOBAN.

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 Bolivia's compliance with this principle.

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

There is insufficient information publicly available as to Bolivia's compliance with this principle. The SIPAV is a RTGS system, where settlements are final and irrevocable, notes the 2006 CEMLA/WB report.

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

There is insufficient information publicly available as to Bolivia'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

There is insufficient information publicly available as to Bolivia'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.

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There is insufficient information publicly available as to Bolivia's compliance with this principle. Per information in the 2006 CEMLA/WB report, the SIPAV has "its own database and appropriate security, and a safe communications channel," (p. 31) to facilitate participant interface and accessibility to immediate liquidity. The SIPAV was launched in 2001 with its own IT system for operational independence in transactions. Further, to maintain continuous flow of transactions and settlement in the system, the BCB provides intraday and overnight credit facilities to the SIPAV participants that are fully collateralized. The report further enumerates other features of the SIPAV that contribute to its operational security. It also notes that the SIPAV's operational procedures are practical, speedy and efficient, with appropriate safety controls so as to optimize time and resources. Transactions are settled on a real-time gross settlement basis. The technology of the SIPAV supports safe, efficient and practical messaging of transaction information. Payments in the system are final and irrevocable. The system also endeavors to reduce and contain systemic risk as well as other risks to promote its stability.

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 as to Bolivia's compliance with this principle. The SIPAV ensures the reduction of transaction costs, states the 2006 CEMLA/WB report.

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

II

There is insufficient information publicly available as to Bolivia's compliance with this principle. The 2006 CEMLA/WB report mentions that only banks and other financial institutions authorized by the BCB are direct participants in the SIPAV with direct access. Access criteria of the system are non-discriminatory and transparent. Further, the BCB charges the participants of the SIPAV fees for the services it renders, and the fee collection commensurates with the recovery of operational costs incurred by the BCB.

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

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There is insufficient information publicly available as to Bolivia'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

There is insufficient information publicly available as to Bolivia's compliance with this principle. The 2006 CEMLA/WB report mentions that the BCB has not been officially assigned with the oversight responsibility of the payment systems in the country under the law. However, by implication, since payment systems are an important element bearing upon the monetary stability of the economy, the BCB, in fulfilling its objective of maintaining monetary policy stability, is charged with the function of overseeing payment systems in Bolivia under the 1998 Property and Credit Law that amended the Law of the Central Bank of Bolivia, stipulating that the BCB would frame payment system policies to fulfill its ultimate objective of maintaining monetary stability in the country. In 2005, the CEMLA/WB report notes, a project was launched to establish the oversight function of the BCB in the legal framework governing payment systems in the country. In this respect, the Law of the Central Bank of Bolivia is sought to be amended to explicitly lay down the oversight responsibility of the BCB with regard to payment systems in the country.

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

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There is insufficient information publicly available as to Bolivia'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.

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There is insufficient information publicly available as to Bolivia'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 as to Bolivia's compliance with this principle. The project launched in 2005 to establish the oversight function of the BCB, as the 2006 CEMLA/WB report mentions, aims to get agreements in place between the BCB and other relevant supervisors to "allow sharing relevant information and coordinated control of risks management" (p. 34).