Poland's payment systems were assessed against the Committee for Payment and Settlement System's Core Principles for Systemically Important Payment Systems (CPSIPS) by the International Monetary Fund (IMF) in 2001. The systems assessed by the IMF in 2001 were SORBNET, ELIXIR, and SYBIR. The IMF assessment concluded that these systems exhibited a high degree of compliance with the CPSIPS, and the main concern raised by the IMF assessors was the lack of clear oversight responsibility, especially in the case of multilateral netting systems. The authorities at the time of the IMF assessment noted that the issue was being addressed. In 2001, the Act on Settlement Finality was passed, stating the National Bank of Poland's (NBP) responsibility for the oversight of payment systems in Poland. After the 2001 IMF assessment, the SYBIR system was discontinued and two new systems began operating: the SORBNET-EURO and the EuroELIXIR. The SORBNET-EURO was assessed by the European Central Bank (ECB) in 2005. Their report concluded that the system achieved a high degree of compliance with all relevant Core Principles (CPs). There is no assessment publicly available of the EuroELIXIR system against the CPSIPS. Moreover, there is little information in public documents of the NBP as to which currently operating systems in Poland are of systemic importance. SORBNET-EURO is linked to the European Union's Trans-European Automated Real-time Gross Settlement Express Transfer (TARGET) system through the Italian RTGS system, BI-REL. Presently, TARGET is being phased out and replaced by its successor TARGET2 and on May 19, 2008, Poland will also join TARGET2. However, there is little information available on the NBP's website regarding its transition to and adoption of TARGET2.

General Overview

The International Monetary Fund (IMF) published a Financial System Stability Assessment (FSSA) of Poland in 2001 in which it assessed three payment systems in the country that it deemed to be of systemic importance. The systems assessed against the Committee for Payment and Settlement System's (CPSS) Core Principles for Systemically Important Payment Systems (CPSIPS) were SORBNET, ELIXIR (the Electronic Clearing House System), and SYBIR. The IMF FSSA concluded that all the systems assessed exhibited a high degree of compliance with the CPSIPS. The main concern raised by the IMF assessors was the lack of clear oversight responsibility, especially in the case of multilateral netting systems. Subsequent to the 2001 FSSA, SYBIR was discontinued and in 2005 the SORBNET-EURO system for euro payments was introduced. The European Central Bank (ECB) in 2005 assessed the SORBNET-EURO system against the CPSIPS and observed that the system "achieved a high degree of compliance with all relevant Core Principles" (p. 5). Of the ten Core Principles (CPs) assessed in the 2005 ECB report, the SORBNET-EURO system fully observed eight, broadly observed one (CP VII), and found that CP V was not applicable. In 2005, EuroELIXIR was launched. However, there is little information publicly available regarding this system's compliance with the CPSIPS. Moreover, there is little information in public documents of the National Bank of Poland (Narodowy Bank Polski, or NBP) as to which currently operating systems in Poland are of systemic importance.

The NBP operates two real-time gross settlement (RTGS) systems: the SORBNET system for payments in zloty (the Polish currency, PLN) and the SORBNET-EURO system for euro payments. SORBNET was launched in March 1996, replacing SORB, which had been in operation since April 1993. SORBNET, according to a 2007 report by the ECB titled "Payment and Securities Settlement Systems in the European Union: Non-Euro Area Countries," (hereafter referred to as the 2007 ECB report) "settles banks' payment orders relating to the interbank money market, foreign exchange and securities market transactions and transactions between banks and Narodowy Bank Polski" (p. 255). SORBNET provides for real-time gross settlement via banks' current accounts with the NBP. According to the 2007 ECB report, the average number of payments processed in the SORBNET system per month in 2006 was 105,785. The average monthly value of trades on bank accounts in the same year was PLN 3.08 trillion (EUR 0.79 trillion).

The SORBNET-EURO system was launched on March 7, 2005, and linked to the Trans-European Automated Real-time Gross Settlement Express Transfer (TARGET) system through the Banca d'Italia and the Italian RTGS system (BI-REL). Per the 2007 ECB report "the SORBNET-EURO system enables banks to settle domestic and cross-border euro payment orders with banks located in the EU, without the use of correspondent banks" (p. 242). The SORBNET-EURO system is required to fulfill all the ECB's participation requirements in TARGET. The 2007 ECB report states that the NBP's settlement account, through which all cross-border payment orders entering and leaving the SORBNET-EURO system are executed, is maintained at the Banca d'Italia and has been placed on the same platform as the Italian BI-REL system. Presently, TARGET is being phased out and replaced by its successor TARGET2. On May 19, 2008, Poland will join TARGET2, but there is no publicly available information as to Poland's readiness for this transition. According to a 2007 report by the ECB titled "Payment and Securities Settlement Systems in the European Union: Euro Area Countries," (hereafter referred to as 2007 ECB report on Euro Area Countries) TARGET2 provides a harmonized service level with a single technical platform across its member countries, as opposed to the decentralized structure of its predecessor. In its 2002 report on TARGET2, the ECB stated "TARGET2 is expected to fully comply with the Bank for International Settlements (BIS) CPSS report on Core Principles for Systemically Important Payment Systems" (p. 7). However, there is little information available on NBP's website regarding its transition to and adoption of TARGET2.

ELIXIR is the retail payment system operating in Poland and settles credit and debit orders transferred by branches of banks via tele-transmission. The National Clearing House (Krojowa Izba Rozliczeniowo, S.A, or KIR), the only clearing house in Poland, operates the ELIXIR system and was established in 1991 as a joint stock company. According to the 2007 ECB report, ELIXIR processed 932.2 million transactions in 2006, with an overall transaction value of PLN 2,385 billion (around EUR 612 billion). The ECB report also notes that, in 2006, the value of transactions processed in ELIXIR increased by around 14 percent as compared with 2005. EuroELIXIR is an interbank settlement system launched by KIR and allows banks to settle both domestic and cross-border electronic euro payments within the territory of the European Union (EU).

The laws governing payment systems in Poland are the 1997 Act on the NBP, the 1997 Banking Act, and the 2001 Act on Settlement Finality in Payment and Securities Settlement Systems and on the Rules of Oversight of these Systems (Act on Settlement Finality). According to the 2007 ECB report, the Act on Settlement Finality clearly states the NBP's responsibility for the oversight of payment systems in Poland. Further, Regulation No 6/2004 of 20 April 2000 (last amended in 2005) specifies the rules on interbank settlements and the Bankruptcy and Rehabilitation Act of 2003 makes provisions for bankruptcy procedures in the country. Other than the NBP, relevant bodies operating or involved in payment system in Poland are the KIR, which is responsible for the clearing of retail payments, and the Polish Financial Supervision Authority, which is responsible for the supervision of the financial market. In terms of payment instruments, cash still plays a predominant role in Poland. In recent years, credit cards have increased in significance as a means of payment.

The Principles

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

II

In its 2001 assessment, the IMF observed that the main cause for concern with Poland's payment system was the lack of clear oversight responsibility and recommended that "the oversight of retail systems should be clearly defined [and] the zero-hour rule should be removed" (p. 65). The authorities noted that both issues were being addressed and subsequently, in 2001, the Act on Settlement Finality was passed, stating the NBP's responsibility for the oversight of payment systems in Poland. No explicit statement was provided by the 2001 FSSA regarding the compliance of Poland with the requirements for this principle and there is no further information publicly available on the matter. According to the 2005 ECB report, SORBNET-EURO fully observes this principle.

The 1997 Banking Act regulates banking activity in Poland and the 2002 Act on Electronic Payment Instruments transposed the European Commission's (EC) Recommendation 97/487/EC concerning transactions carried out by electronic payment instruments. Provisions relating to insolvency proceedings are contained in the 2001 Act on Settlement Finality, as well as in the Bankruptcy and Rehabilitation Act of 28 February 2003. The above regulations, according to the 2007 ECB report, "ensure that the zero-hour rule does not apply to the payment systems within the scope of their effect" (p. 246).

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

The 2001 FSSA concluded that the SORBNET and ELIXIR systems required no further action to achieve compliance with this principle. However, no explicit compliance statement was provided by the 2001 FSSA and there is no further information publicly available addressing this issue. The 2005 ECB assessment of the SORBNET-EURO system concluded that the system fully observes this principle.

The ECB's 2007 report notes that all banks participating in the SORBNET system are required to open an account with the central bank. The services offered to those accounts are detailed in bank account agreements between the central bank and participants of the SORBNET system. The operating rules for the SORBNET system are specified in the resolutions of the NBP's Management Board and in the bank account agreement concluded between NBP and the individual banks which have their settlement accounts with NBP in the SORBNET system. According to the 2007 ECB report, "the resolutions cover access criteria, the types of payment to be processed and the general prerequisites concerning the technical infrastructure and fees" (p. 254). The terms and conditions governing banks' participation in the SORBNET-EURO system are specified in Resolution No 20/2004 of the Management Board of the National Bank of Poland of 2004. The rules of operation of the SORBNET-EURO system are specified in Regulation No 6/2004 of the President of the National Bank of Poland of 2004. There is little information publicly available on the ELIXIR and EuroELIXIR systems regarding the requirements for 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

The 2001 FSSA concluded that the SORBNET and ELIXIR systems required no further action regarding compliance with this principle. However, no explicit compliance statement was provided by the 2001 FSSA and there is no further information publicly available addressing this issue. The 2005 ECB assessment of the SORBNET-EURO system concluded that the system fully observes this principle. The 2007 ECB report notes that SORBNET is a RTGS system and therefore ensures that credit risks are mitigated. In addition, banks now have access to liquidity through the use of intraday credit lending. According to ECB's 2005 report, the SORBNET-EURO is also a RTGS system and the ECB notes that "no credit risk arises between its participants or between its participants and participants in any of the national RTGS systems participating in or being connected to TARGET" (p. 9). The 2007 ECB report indicates that the NBP supports the liquidity of settlements in the SORBNET-EURO system by granting intraday credit in euro to banks. The same report also notes that with the introduction of settlement guarantee by the KIR in 2004, the systemic risk posed by the possibility of a bank's withdrawal from settlement in the ELIXIR system has been eliminated.

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 2001 FSSA concluded that the SORBNET and ELIXIR systems required no further action regarding compliance with this principle. However, no explicit compliance statement was provided by the 2001 FSSA and there is no further information publicly available addressing this issue. The 2005 ECB assessment of the SORBNET-EURO system concluded that the system fully observes this principle and the system guarantees prompt final settlement on the day of value. The SORBNET system is an RTGS system in which payment orders are processed as long as there are sufficient funds in the sender's account. In the event funds are not sufficient to settle a payment, the order shifts to a central queue until sufficient funds are available to execute the queued payments. The ELIXIR and EuroELIXIR systems are net settlement systems in which multilateral netting of the mutual positions of participants occurs. According to the 2007 ECB report, orders are placed by the KIR with NBP for booking on banks' accounts in the case of the ELIXIR system. According to the same report, with the introduction of settlement guarantee by the KIR in 2004, the systemic risk posed by the possibility of a bank's withdrawal from settlement has been eliminated.

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

The 2001 FSSA concluded that no action was required by Poland with regards to this principle. This principle is not applicable to SORBNET or SORBNET-EURO systems. The ELIXIR and EuroELIXIR systems are net settlement systems in which multilateral netting of the mutual positions of participants occurs. According to the 2007 ECB report, orders are placed by the KIR with NBP for booking on banks' accounts in the case of the ELIXIR system. According to the same report, with the introduction of settlement guarantee by the KIR in 2004, the systemic risk posed by the possibility of a bank's withdrawal from settlement has been eliminated.

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

The 2001 FSSA concluded that the SORBNET and ELIXIR systems required no further action regarding compliance with this principle. However, no explicit compliance statement was provided by the 2001 FSSA and there is no further information publicly available addressing this issue. The 2005 ECB assessment of the SORBNET-EURO system concluded that the system fully observes this principle. The SORBNET-EURO system, according to the same report, settles in central bank money and in the books of the central bank. The 2007 ECB report notes that interbank settlements take place on the banks' current accounts held with NBP.

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 2001 FSSA concluded that the SORBNET and ELIXIR systems required no further action regarding compliance with this principle. However, no explicit compliance statement was provided by the 2001 FSSA and there is no further information publicly available addressing this issue. The 2005 ECB assessment of the SORBNET-EURO system concluded that the system largely observes this principle. According to the same report, in the case of SORBNET-EURO, its "business continuity and contingency arrangements in place do not yet fully meet the requirements. [However] the NBP has prepared a Business continuity plan for the SORBNETEURO system and an amended action plan" (p. 11). As noted in the NBP's 2006 Financial Stability Report (published in 2007 and hereafter referred to as the NBP's 2007 report), "the safety of interbank settlements executed via the ELIXIR system is ensured by the settlement guarantee mechanism. It raises the safety level of interbank payments executed via the system" (p. 97).

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

II

The 2001 FSSA concluded that the SORBNET system needed to establish an intraday credit facility with the NBP, which would lead to reduced costs for SORBNET participants. However, according to the NBP's 2002 report on payment systems in Poland as well as the ECB's 2007 report, the country has since met this requirement and banks now have access to the intraday lending facility when settling through the SORBNET or the SOBNET-EURO system. The IMF FSSA made no recommendation with regards to the ELIXIR system nor did it state an explicit compliance level for both systems. The 2005 ECB assessment of the SORBNET-EURO system concluded that the system fully observes this principle.

According to the 2007 ECB report, the NBP charges participants of the SORBNET system a onetime access fee of EUR 6,526, a quarterly fee of EUR 1,044 and a per transaction fee amounting to EUR 1.31. With the ELIXIR system, the fee is determined by the KIR and is only charged to the sending participant. In addition, the fee is based on the message type and the transmission media. Participants who are already in the ELIXIR system also have access to the ELIXIR-EURO system at no charge. The 2005 ECB report notes that the SORBNET-EURO system follows TARGET's cost methodology. In its fee structure, the system takes into account development costs, operating costs, and overheads. The same report indicates that the operational capacity of the SORBNET-EURO system can meet the needs of its users and any level of demand.

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

II

The 2001 FSSA concluded that the SORBNET and ELIXIR systems required no further action regarding compliance with this principle. However, no explicit compliance statement was provided by the 2001 FSSA and there is no further information publicly available addressing this issue. The 2005 ECB assessment of the SORBNET-EURO system concluded that the system fully observes this principle. According to ECB's 2007 report, resolution No 20/2004 of the Management Board of NBP of 22 April 2004 on the terms and conditions for opening and maintaining banks' accounts with NBP provides the requirements for banks that want to have access to SORBNET. The 2007 ECB report notes that KIR, which operates ELIXIR and ELIXIR-EURO must grant participation into either system through its Supervisory Board. Potential participants must also meet other financial criteria. The 2005 ECB report notes that the fee structure for the SORBNET EURO system comprises of a onetime access fee, a quarterly fee, and a transaction fee. The objective of the different fees is to recover costs. Access requirements are publicly available and are provided in an Appendix to the Agreement on Terms and Conditions for the Opening and Operation of an RTGS account in the SORBNET-EURO system.

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

II

The 2001 FSSA concluded that the SORBNET and ELIXIR systems required no further action regarding compliance with this principle. However, no explicit compliance statement was provided by the 2001 FSSA and there is no further information publicly available addressing this issue. The 2005 ECB assessment of the SORBNET-EURO system concluded that the system fully observes 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.

EN

In its 2001 assessment, the IMF observed that the main cause for concern with Poland's payment system was the lack of clear oversight responsibility and recommended that "the oversight of retail systems should be clearly defined" (p. 65). The authorities noted that the issue was being addressed. In 2001, the Act on Settlement Finality was passed stating the NBP's responsibility for the oversight of payment systems in Poland. The NBP's role in the area of payment systems is defined in Art. 3.2 of the 1997 Act on the National Bank of Poland and the main principles of the oversight of payment systems in Poland are stipulated in the Act on Settlement Finality. According to the NBP's 2004 report titled "The Role of the National Bank of Poland in the Oversight of Payment Systems," NBP's objectives of the oversight, its legal basis as well as the criteria and instruments of its conduct are defined in the 'Policy of the National Bank of Poland in the Area of Payment Systems Oversight.' The NBP's objectives in the oversight of payment systems are: "(1) to maintain stability of the financial sector by ensuring the effectiveness and reliability of payment systems and their conformity with legal provisions; (2) to maintain public confidence in payment systems, payment instruments and the domestic currency; and (3) to ensure and protect transmission channels of monetary policy" (p. 16).

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

EN

According to the 2007 ECB report and the NBP's 2004 report, in its oversight of the country's payment systems, the NBP assesses payments systems for its compliance with Polish law and the systems' safety, soundness and efficiency. Moreover, the standards the NBP uses in its assessments are the CPSS' CPSIPS and the EU's oversight standards for retail payment systems.

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.

EN

Refer to Principle B.

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.

EN

Per the 2007 ECB report, the NBP cooperates with the following domestic agencies, namely, the Polish Bankers Association (Zwiazku Bankow Polskich), Ministry of Finance (Ministerstwo Finansów) and the Polish Financial Supervisory Authority (Komisja Nadzoru Finansowego) in terms of payment systems. In terms of foreign bodies, the NBP cooperates with the ECB and the European Commission on matters relating to payment systems. In 1998, the Payment System Council was established within the NBP with the task of aligning payment systems in Poland with EU requirements.