General Overview
In Turkey, interbank payments are processed through the following systems: Turkish Interbank Clearing System (TIC-RTGS); the Central Bank of the Republic of Turkey (CBRT) giro system; interbank clearing houses (ICHs); and the Bank Card Centre (BCC). The Central Bank of the Republic of Turkey - Türkiye Cumhuríyet Merkez Bankasi (CBRT), in its 2006 Financial Stability Report (FSR), claims that as a systemically important payment system, Turkish Interbank Clearing - Electronic Funds Transfer System (TIC-RTGS) mostly complies with the Core Principles for Systemically Important Payment Systems (CPSIPS). (CBRT and BIS 2000, p. 9; CBRT 2006, p. 118) However, there is no publicly available information as to the compliance of the other interbank payments systems with the CPSIPS.
The CBRT 2006 FSR further states Turkish Liras inter bank payments, CBRT money market transfers, and retail payments are realized via TIC-RTGS. To attain full membership of the European Union (EU) Turkey's TIC-RTGS will be required to fully comply with the Trans European Automated Real Time Gross Settlement Express Transfer System (TARGET). TIC-RTGS already has the technical infrastructure compatible with TARGET. (CBRT 2006, p. 118)
TIC-RTGS is a real-time gross settlement (RTGS), whereas the CBRT giro system is a simple gross settlement system. The ICHs and the BCC are deferred net settlement systems. Payment obligations resulting from stock exchange transactions are settled through the Takasbank net settlement system. Regardless of the system used, all payments are finally settled in the books of CBRT. A separate account, the TIC-RTGS account, is used for settlement of inter-bank payments processed by TIC-RTGS. The ICHs and the BCC have special settlement accounts at CBRT. Banks monitor their liquidity position by reviewing the balances in all settlement accounts. (CBRT and BIS 2000, pp. 8-9)
Although there are no laws dealing specifically with payment and settlement systems, a number of laws have a bearing on payment-related activities and institutions: the Central Bank Act (Law No. 1715 enacted in 1930 and Law No. 1211 enacted in 1970); the Banks Act (Law No: 7129 enacted in 1958; replaced by Law No. 4389 enacted in 1999); the Cheque Act (Law No. 3167 on "Arrangement of Payments by Cheque and Protection of Cheque Bearers," 1985); and the Trade Act (Law No. 6762, Articles 557-815, Commercial Paper, 1956). The rules and procedures governing participation in TIC-RTGS are regulated by a special agreement between the CBRT and the participating banks. The banks sign a protocol with CBRT agreeing to comply with the provisions of the Operational Rules Book. This defines the relationship between the CBRT and the participating banks and between the participants in regard to the services provided by TIC-RTGS. In particular, it specifies the roles and responsibilities of various parties involved in the system. (CBRT and BIS 2000, pp. 1-2)
The law of April 2001 amending the Central Bank law enables CBRT to regulate the volume and the circulation of the Turkish Lira, to establish payment, securities transfer and settlement systems. The law also introduces regulations ensuring uninterrupted operations and supervision of existing or future systems. (EC 2001, p. 53)
CBRT has played a leading role in the modernization of services. Its objective and role in payment system arrangements is to ensure a reliable, effective, broad-based and low-cost system. It has initiated a number of major projects to develop secure, reliable and efficient inter-bank payment and settlement systems. In particular, the Turkish RTGS system, TIC-RTGS, has given the financial system an efficient funds transfer system. (CBRT and BIS 2000, pp. 1, 4)
The Principles
I. The system should have a well-founded legal basis under all relevant jurisdictions. |
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In Turkey, interbank payments are processed through the following systems: Turkish Interbank Clearing System (TIC-RTGS); the Central Bank of the Republic of Turkey (CBRT) giro system; interbank clearing houses (ICHs); and the Bank Card Centre (BCC). The Central Bank of the Republic of Turkey - Türkiye Cumhuríyet Merkez Bankasi (CBRT), in its 2006 Financial Stability Report (FSR), claims that as a systemically important payment system, Turkish Interbank Clearing - Electronic Funds Transfer System (TIC-RTGS) mostly complies with the Core Principles for Systemically Important Payment Systems (CPSIPS). (CBRT and BIS 2000, p. 9; CBRT 2006, p. 118) However, there is no publicly available information as to the compliance of the other interbank payments systems with the CPSIPS.
According to a 2000 report prepared jointly by the Bank for International Settlements (BIS) and the CBRT, there are no laws dealing specifically with payment and settlement systems; however, a number of laws have a bearing on payment-related activities and institutions, which are: (1) the Central Bank Act; (2) the Banks Act; (3) the Special Finance Houses Decree the establishment and operation of special finance houses; (4) the Cheque Act; and (5) the Trade Act. The Central Bank Act regulates the operations of CBRT, whose major functions and responsibilities derive from this Act. The Banks Act regulates the business activities of all banks in Turkey and the Cheque Act governs all aspects of payment by check and provides the framework for issue, acceptance and payment of checks. Article 6 of the Cheque Act governs the establishment and functioning of the inter-bank clearing houses. The Trade Act defines the form and usage of commercial paper and bills. (CBRT and BIS 2000, p. 1)
Despite the lack of specific legal provisions governing payment systems in Turkey, the operational procedures, rights and obligations in the Turkish Interbank Clearing System and Real-Time Gross Settlement System (TIC-RTGS) are governed by private law agreements between CBRT, as the system operator, and the participants in the system. These are supported by procedures and rules documented in the Operational Rules Book and User Guide. (CBRT and BIS 2000, p. 12)
The law of April 2001 amending the Central Bank law enables CBRT to regulate the volume and the circulation of the Turkish Lira, to establish payment, securities transfer and settlement systems. The law also introduces regulations ensuring uninterrupted operations and supervision of existing or future systems. (EC 2001, p. 53)
II. The system's rules and procedures should enable participants to have a clear understanding of the systems impact on each of the financial risks they incur through participation in it. |
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In Turkey, interbank payments are processed through the following systems: Turkish Interbank Clearing System (TIC-RTGS); the Central Bank of the Republic of Turkey (CBRT) giro system; interbank clearing houses (ICHs); and the Bank Card Centre (BCC). The Central Bank of the Republic of Turkey - Türkiye Cumhuríyet Merkez Bankasi (CBRT), in its 2006 Financial Stability Report (FSR), claims that as a systemically important payment system, Turkish Interbank Clearing - Electronic Funds Transfer System (TIC-RTGS) mostly complies with the Core Principles for Systemically Important Payment Systems (CPSIPS). (CBRT and BIS 2000, p. 9; CBRT 2006, p. 118) However, there is no publicly available information as to the compliance of the other interbank payments systems with the CPSIPS.
According to a 2000 report prepared jointly by the Bank for International Settlements (BIS) and the Central Bank of the Republic of Turkey (CBRT), the rules and procedures governing participation in the national real-time gross settlement system, the Turkish Interbank Clearing System and Real-Time Gross Settlement System (TIC-RTGS) are regulated by a special agreement between CBRT and the participating banks. The banks sign a protocol with CBRT agreeing to comply with the provisions of the Operational Rules Book. This defines the relationship between CBRT and the participating banks and between the participants in regard to the services provided by TIC-RTGS. In particular, it specifies the roles and responsibilities of various parties involved in the system. (CBRT and BIS 2000, p. 2)
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. |
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In Turkey, interbank payments are processed through the following systems: Turkish Interbank Clearing System (TIC-RTGS); the Central Bank of the Republic of Turkey (CBRT) giro system; interbank clearing houses (ICHs); and the Bank Card Centre (BCC). The Central Bank of the Republic of Turkey - Türkiye Cumhuríyet Merkez Bankasi (CBRT), in its 2006 Financial Stability Report (FSR), claims that as a systemically important payment system, Turkish Interbank Clearing - Electronic Funds Transfer System (TIC-RTGS) mostly complies with the Core Principles for Systemically Important Payment Systems (CPSIPS). (CBRT and BIS 2000, p. 9; CBRT 2006, p. 118) However, there is no publicly available information as to the compliance of the other interbank payments systems with the CPSIPS.
According to a 2000 report prepared jointly by the Bank for International Settlements (BIS) and the Central Bank of the Republic of Turkey (CBRT), in the Turkish Interbank Clearing System and Real-Time Gross Settlement System (TIC-RTGS), payment instructions are executed only if there are sufficient funds in the participant's TIC-RTGS account. There is no credit risk for any payments accepted in the system and recipients are notified after the payments are settled. In order to keep TIC-RTGS operating smoothly and provide liquidity so as to enable the banking system to perform time-limited payments in advance, in July 1999, CBRT started providing interest-free daylight overdrafts to the banks against collateral within their inter-bank borrowing limits. The banks may request an overdraft between 09:00 and 15:00. The overdraft has to be covered by the end of the day, otherwise it is converted into a penalized overnight credit. (CBRT and BIS 2000, p. 12)
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.) |
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In Turkey, interbank payments are processed through the following systems: Turkish Interbank Clearing System (TIC-RTGS); the Central Bank of the Republic of Turkey (CBRT) giro system; interbank clearing houses (ICHs); and the Bank Card Centre (BCC). The Central Bank of the Republic of Turkey - Türkiye Cumhuríyet Merkez Bankasi (CBRT), in its 2006 Financial Stability Report (FSR), claims that as a systemically important payment system, Turkish Interbank Clearing - Electronic Funds Transfer System (TIC-RTGS) mostly complies with the Core Principles for Systemically Important Payment Systems (CPSIPS). (CBRT and BIS 2000, p. 9; CBRT 2006, p. 118) However, there is no publicly available information as to the compliance of the other interbank payments systems with the CPSIPS.
According to a 2000 report prepared jointly by the Bank for International Settlements (BIS) and the Central Bank of the Republic of Turkey (CBRT), in Turkey, inter-bank payments are processed through the Turkish Interbank Clearing System and Real-Time Gross Settlement System (TIC-RTGS), CBRT giro system, interbank clearing houses (ICHs) and Bank Card Centre (BCC). (CBRT and BIS 2000, p. 8)
All messages received at the TIC-RTGS Centre are executed immediately; settlement is final and irrevocable. TIC-RTGS accounts are used for settlement: initial values for these accounts are transferred from participants' giro accounts at CBRT at the beginning of each business day and are continuously updated. The balances are updated by incoming and outgoing payments as well as transfers to and from a bank's giro (free) account with CBRT. A bank can request a transfer from its free account at any time during the business day. At the end of the day, the balances in TIC-RTGS accounts are transferred back to participants' giro accounts at the CBRT. Payments are made available to the recipient immediately after settlement in the TIC-RTGS account. The Operational Rules Book of the TIC-RTGS system recommends that customer accounts be credited the same day. (CBRT and BIS 2000, p. 14)
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.) |
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In Turkey, interbank payments are processed through the following systems: Turkish Interbank Clearing System (TIC-RTGS); the Central Bank of the Republic of Turkey (CBRT) giro system; interbank clearing houses (ICHs); and the Bank Card Centre (BCC). The Central Bank of the Republic of Turkey - Türkiye Cumhuríyet Merkez Bankasi (CBRT), in its 2006 Financial Stability Report (FSR), claims that as a systemically important payment system, Turkish Interbank Clearing - Electronic Funds Transfer System (TIC-RTGS) mostly complies with the Core Principles for Systemically Important Payment Systems (CPSIPS). (CBRT and BIS 2000, p. 9; CBRT 2006, p. 118) However, there is no publicly available information as to the compliance of the other interbank payments systems with the CPSIPS.
According to a 2000 report prepared jointly by the Bank for International Settlements (BIS) and the Central Bank of the Republic of Turkey (CBRT), the Interbank Clearing Houses (ICHs) and the Bank Card Center (BCC) are deferred net settlement systems. Regardless of the system used, all payments are finally settled in the books of CBRT. The ICHs and the BCC have special settlement accounts at CBRT. Banks monitor their liquidity position by reviewing the balances in all settlement accounts. (CBRT and BIS 2000, p. 9)
CBRT's Ankara branch consolidates the lists received from all ICHs and determines the net debit or credit for each bank. CBRT maintains a separate settlement account for ICH settlements. Consolidated debits or credits are reflected in these settlement accounts. Banks are informed about the outcome by 18:00 each day. Debtor banks have to settle their outstanding debit position by payment from their giro deposits at CBRT's Ankara branch or via the Turkish Interbank Clearing System and Real-Time Gross Settlement System (TIC-RTGS) not later than 12:00 on the following business day. Once all debtor banks have paid their debts, the Ankara branch makes payments to creditor banks. (CBRT and BIS 2000, p. 11)
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. |
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According to a 2000 report prepared jointly by the Bank for International Settlements (BIS) and the Central Bank of the Republic of Turkey (CBRT), regardless of the system used, all payments are finally settled in the books of the CBRT. A separate account, the TIC-RTGS account, is used for settlement of interbank payments processed by TIC-RTGS. The ICHs and the BCC have special settlement accounts at the CBRT. Banks monitor their liquidity position by reviewing the balances in all settlement accounts and payment instructions are executed only if there are sufficient funds in the participant's TIC-RTGS account. There is no credit risk for any payments accepted in the system and recipients are notified after the payments are settled. In order to keep TIC-RTGS operating smoothly and provide liquidity so as to enable the banking system to perform time-limited payments in advance, in July 1999, CBRT started providing interest free daylight overdrafts to the banks against collateral within their inter-bank borrowing limits. The banks may request an overdraft between 09:00 and 15:00. The overdraft has to be covered by the end of the day, otherwise it is converted into a penalized overnight credit. (CBRT and BIS 2000, pp. 9, 14-15)
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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In Turkey, interbank payments are processed through the following systems: Turkish Interbank Clearing System (TIC-RTGS); the Central Bank of the Republic of Turkey (CBRT) giro system; interbank clearing houses (ICHs); and the Bank Card Centre (BCC). The Central Bank of the Republic of Turkey - Türkiye Cumhuríyet Merkez Bankasi (CBRT), in its 2006 Financial Stability Report (FSR), claims that as a systemically important payment system, Turkish Interbank Clearing - Electronic Funds Transfer System (TIC-RTGS) mostly complies with the Core Principles for Systemically Important Payment Systems (CPSIPS). (CBRT and BIS 2000, p. 9; CBRT 2006, p. 118) However, there is no publicly available information as to the compliance of the other interbank payments systems with the CPSIPS.
According to a 2000 report prepared jointly by the Bank for International Settlements (BIS) and the Central Bank of the Republic of Turkey (CBRT), a high degree of security is provided in the Turkish Interbank Clearing System and Real-Time Gross Settlement System (TIC-RTGS), the real time gross settlement system. Multilevel security controls have been implemented to ensure the integrity, authenticity and confidentiality of transactions. Data transfers between relay computers and TIC-RTGS are secured by using data encryption. (CBRT and BIS 2000, p. 14)
The TIC-RTGS system comprises a relay computer (RC) located on the participant's premises and a central computer system. Every participant, including CBRT, must have an RC to take part in TIC-RTGS. The RC systems, including alternative hardware configurations, software and upgrades and changes, are specified by CBRT. The RC provides the participant with message entry, fund verification and account enquiry facilities. The RC has a mirror copy of the central computer's reserve balances for a participant. This obviates the need for a query on the central computer. CBRT's RC has some additional facilities. A participant's host computer can be integrated into TIC-RTGS through a connection to the RC. In this way, a host terminal can be used to generate payment messages. The TIC-RTGS Centre has a fault-tolerant computer system with redundant backup facilities. System upgrades and maintenance can be performed without interrupting operations. Apart from the production system, there are separate test and development systems for system development and maintenance. If participants lose their online connectivity, alternative arrangements are available to enable them to send their transactions to the host system via magnetic tapes prepared on their RC, or in the event of failure of the RC transactions can be entered directly in the host system. Similarly, the TIC-RTGS Centre can send messages to such failed participants on tapes or by fax. (CBRT and BIS 2000, p. 13)
VIII. The system should provide a means of making payments which is practical for its users and efficient for the economy. |
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In Turkey, interbank payments are processed through the following systems: Turkish Interbank Clearing System (TIC-RTGS); the Central Bank of the Republic of Turkey (CBRT) giro system; interbank clearing houses (ICHs); and the Bank Card Centre (BCC). The Central Bank of the Republic of Turkey - Türkiye Cumhuríyet Merkez Bankasi (CBRT), in its 2006 Financial Stability Report (FSR), claims that as a systemically important payment system, Turkish Interbank Clearing - Electronic Funds Transfer System (TIC-RTGS) mostly complies with the Core Principles for Systemically Important Payment Systems (CPSIPS). (CBRT and BIS 2000, p. 9; CBRT 2006, p. 118) However, there is no publicly available information as to the compliance of the other interbank payments systems with the CPSIPS.
According to a 2000 report prepared jointly by the Bank for International Settlements (BIS) and the Central Bank of the Republic of Turkey (CBRT), in recent years, due to the advances in telecommunications and banking technology, the use of electronic transfers has risen strongly for both retail payments and high-value transactions. As a result of these developments, banks have vastly improved their service levels. (CBRT and BIS 2000, p. 8)
The CBRT website states that the utilization of the Turkish Interbank Clearing System and Real-Time Gross Settlement System (TIC-RTGS) has sharply increased both volumes and values of transactions, due to the fact that retail payments were introduced to the system over the years, although central bank payments and large value payments between banks were the main reasons the system was initially used. Participants are currently promoting retail RTGS transfers through r interactive telephones, ATMs and Internet payment services where customers may transact RTGS transfers in real-time and at low cost. (CBRT website)
IX. The system should have objective and publicly disclosed criteria for participation, which permit fair and open access. |
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In Turkey, interbank payments are processed through the following systems: Turkish Interbank Clearing System (TIC-RTGS); the Central Bank of the Republic of Turkey (CBRT) giro system; interbank clearing houses (ICHs); and the Bank Card Centre (BCC). The Central Bank of the Republic of Turkey - Türkiye Cumhuríyet Merkez Bankasi (CBRT), in its 2006 Financial Stability Report (FSR), claims that as a systemically important payment system, Turkish Interbank Clearing - Electronic Funds Transfer System (TIC-RTGS) mostly complies with the Core Principles for Systemically Important Payment Systems (CPSIPS). (CBRT and BIS 2000, p. 9; CBRT 2006, p. 118) However, there is no publicly available information as to the compliance of the other interbank payments systems with the CPSIPS.
X. The system's governance arrangements should be effective, accountable and transparent. |
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In Turkey, interbank payments are processed through the following systems: Turkish Interbank Clearing System (TIC-RTGS); the Central Bank of the Republic of Turkey (CBRT) giro system; interbank clearing houses (ICHs); and the Bank Card Centre (BCC). (CBRT and BIS 2000, p. 9)
The CBRT issues "Rule Books" concerning the regulations of the payment systems. Rule Books are designed to address general rules, principles, and regulations for payment systems and instruments. For the details of any particular system function, instrument, and regulation, the Rule Books refer to more operational and technical guidelines and CBRT circulars. Rule Books are drafted by the relevant departments at the Head Office and are approved by the CBRT's Management Committee. Rule Books define: (1) the roles and responsibilities of the organizations in the payment systems; (2) the functions of each component of the payment systems (that is, central systems, system participants, network, etc.); (3) criteria for joining the system and membership termination conditions; (4) systems and timetables; (5) instruments and conditions for their use; (6) pricing; (7) emergency procedures; (8) security considerations; (9) penalties; and (10) resolution of disputes. (Bossone & Cirasino 2001, p. 62)
The CBRT pursues its oversight function on a daily basis through its relevant departments to ensure the smooth functioning of payment systems. Since April 1992 the CBT has prepared monthly reports on the use of payment systems. The CBRT has a specific website for the payment systems, with access restricted to payment system participants and members of the TBA, where the monthly reports are available together with updated documents, minutes of participant meetings, and announcements. (Bossone & Cirasino 2001, p. 62)
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. |
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According to a 2000 report prepared jointly by the Bank for International Settlements (BIS) and the Central Bank of the Republic of Turkey (CBRT), the responsibilities of CBRT with regard to,TIC-RTGS, are: (1) Operating the system and providing technical and help desk support to the participants; (2) Setting up the legal and operational framework of the system; (3)Auditing and controlling the system as a whole; (4) Investigating changes in participants' requirements and the need for improvements to the system, and planning development in coordination with the participants and the Banks Association of Turkey (BAT); and (5)Assessing new trends and needs in the banking sector and their implications for the development of the system. (BIS CBRT and BIS 2000, p. 17)
As the overseer of the payment system, the CBRT informs other relevant authorities of payment system developments, and exchanges views with them through formal correspondence and meetings. In the case of Takasbank, the custodian and settlement bank of the Istanbul Stock Exchange (ISE), in charge of overseeing the banks and the brokers operating in the ISE, cooperation is very tight. Takasbank views are reflected in the design and regulations of the payment systems. (Bossone & Cirasino 2001, p. 62)
B. The central bank should ensure that the systems it operates comply with the Core Principles. |
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The Central Bank of the Republic of Turkey - Türkiye Cumhuríyet Merkez Bankasi (CBRT), in its 2006 Financial Stability Report (FSR) claims that as a systemically important payment system, Turkish Interbank Clearing - Electronic Funds Transfer System (TIC-RTGS) mostly complies with the Core Principles for Systemically Important Payment Systems. (CBRT 2006, p. 118)
According to Article 55 of CBRT Law no. 1211 and the Cheque Act no. 3167, on the Protection of Check Bearers and the Arrangement of Check Payments, CBRT is authorized and responsible for the establishment and supervision of the Check Clearing System. CBRT established the Interbank Cheque Clearing Houses Center (ICH) as a legal entity to execute clearing and settlement system for checks according to the By-Law on ICH, which is issued by CBRT in respect to Article 6 of the Cheque Act. (CBRT 2006, p. 120)
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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As the overseer of the payment system, the CBRT informs other relevant authorities of payment system developments, and exchanges views with them through formal correspondence and meetings. In the case of Takasbank, the custodian and settlement bank of the Istanbul Stock Exchange (ISE), in charge of overseeing the banks and the brokers operating in the ISE, cooperation is very tight. Takasbank views are reflected in the design and regulations of the payment systems. (CEMLA 2001, p. 62) However, there is no publicly available information as to Turkey's compliance with this principle.
The Central Bank of the Republic of Turkey - Türkiye Cumhuríyet Merkez Bankasi (CBRT), in its 2006 Financial Stability Report (FSR) states that according to Article 55 of CBRT Law no. 1211 and the Cheque Act no. 3167, on the Protection of Check Bearers and the Arrangement of Check Payments, CBRT is authorized and responsible for the establishment and supervision of the Check Clearing System. CBRT established the Interbank Cheque Clearing Houses Center (ICH) as a legal entity to execute clearing and settlement system for checks according to the By-Law on ICH, which is issued by CBRT in respect to Article 6 of the Cheque Act. (CBRT 2006, p. 120)
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. |
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As the overseer of the payment system, the CBRT informs other relevant authorities of payment system developments, and exchanges views with them through formal correspondence and meetings. In the case of Takasbank, the custodian and settlement bank of the Istanbul Stock Exchange (ISE), in charge of overseeing the banks and the brokers operating in the ISE, cooperation is very tight. Takasbank views are reflected in the design and regulations of the payment systems. (Bossone & Cirasino 2001, p. 62) However, there is no publicly available information as to Turkey's compliance with this principle
Turkey