Based on information provided on Egypt on the FIRST Initiative website, there are three payment systems in the country, namely: (1) the High Value Gross Settlement System (FinCopy); (2) the Automated Clearing House System (ACH); and (3) the Government T-Bills Registry System. According to a 2004 World Bank report, the Check Clearing system and the Gross Settlement system - both owned and operated by the Central Bank of Egypt (CBE) - largely comply with the Committee on Payment and Settlement Systems Core Principles for Systemically Important Payment Systems (CPSIPS). However, besides this statement from the World Bank report, there is little information relating to Egypt's compliance with the CPSIPS; moreover, Egypt is in the process of reforming its Payment Systems and has sought the assistance of the World Bank and International Monetary Fund in this regard. According to a 2003 CBE report, as part of the authorities' financial modernization process the authorities intend to bring the Egyptian Payment System in line with the CPSIPS. In this regard a Central Bank Law that clarifies the roles and responsibilities of the CBE in owning, operating, and overseeing the payment system has been enacted, and a payment system department within CBE has been established. Furthermore, according to the CBE's 2006 Annual Report, a legal framework for the National Payment System (which will include the establishment of a Real Time Gross Settlement system) that will be in line with international practices is currently being established and is expected to be completed by the end of 2007.

General Overview

A 2003 report by the Central Bank of Egypt (CBE) indicates that modernizing the Egyptian Payment System and bringing it in line with the Committee on Payment and Settlement Systems Core Principles for Systemically Important Payment Systems (CPSPSIP) is one of the financial sector reform goals set out by the CBE. Based on the 2003 CBE report the reforms already implemented are as follows: (1) an automated clearing house (ACH) has been set up; (2) a payment system department within CBE has been established; (3) a Central Bank Law that clarifies the roles and responsibilities of the CBE in owning, operating and overseeing payment system has been enacted; and (4) an electronic signature law has been approved.

According to a 2004 World Bank report by Creane et al, cash is the major payment instrument and the check clearing system and gross settlement system, both owned and operated by the Central Bank of Egypt, largely complies with the CPSIPS. Based on information provided on Egypt on the FIRST Initiative website, the payment systems operating in Egypt are: (1) the high value gross settlement system (FinCopy, established in March 2000); (2) the ACH System (also known as the Cairo Clearing System, which went live in June 2002); and (3) the Government T-Bills Registry System (established in June 2002). The FIRST Initiative website also notes that an electronic Real Time Gross Settlement System (RTGS) is due to be implemented as part of Egypt's financial reforms. According to the 2006 Annual Report by the Central Bank of Egypt, the RTGS system was expected to be completed in the third quarter of 2007.

According to the CBE's 2006 Annual Report, a legal framework for the National Payment System that will be in line with international practices is currently being established and is expected to be completed by the end of 2007. To this end, the National Council for Payments was set up, so as to be able to increase awareness of the functioning of payment systems and to cooperate with and get assistance from institutes such as the World Bank, the International Monetary Fund (IMF) and the European Commission to conform the Egyptian payment system to standards set by international institutions. The report also states that oversight rules for the National Payment System are being prepared with the help of foreign institution so as to minimize systemic risks within the system.

The Principles

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

ID

According to the CBE's 2006 Annual Report, a legal framework for the National Payment System that will be in line with international practices is currently being established and is expected to be completed by the end of 2007. The 2003 CBE report indicates that the Central Bank Law clarifies that the responsibility of owning and operating the payment systems as well as the role of overseeing payment system lies within the responsibility of the CBE.

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 Egypt'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 Egypt'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 Egypt'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

There is insufficient information publicly available as to Egypt'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 Egypt'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

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

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 Egypt's compliance with this principle.

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

II

There is insufficient information publicly available as to Egypt'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 Egypt's compliance with this principle. However, the 2003 CBE report indicates that the Central Bank Law makes it clear that the responsibility of owning and operating the payment systems as well as the role of overseeing payment system lies within the responsibility of the CBE.

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

II

There is insufficient information publicly available as to Egypt's compliance with this principle. However, the 2003 CBE report indicates that the Central Bank Law makes it clear that the responsibility of owning and operating the payment systems as well as the role of overseeing payment system lies within the responsibility of the CBE. A 2006 annual report by the CBE notes that oversight rules for the National Payment System are being prepared with the help of foreign institution so as to minimize systemic risks within the system.

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

There is insufficient information publicly available as to Egypt's compliance with this principle. However, according to the 2003 CBE report, the Central Bank Law makes it clear that the responsibility of owning and operating the payment systems as well as the role of overseeing payment system lies within the responsibility of the CBE. A 2006 annual report by the CBE notes that oversight rules for the National Payment System are being prepared with the help of foreign institution so as to minimize systemic risks within the system.

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 Egypt's compliance with this principle.