Full Compliance Summary

In 2001, the International Monetary Fund (IMF) assessed Finland's systemically important payment systems, which at the time were the Bank of Finland's (BoF) real-time gross settlement system (BoF-RTGS), the large-value payment system for express transfers and checks (POPS), and the retail payment system (PMJ). BoF-RTGS was a component of the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) system, the euro area payment system. An enhanced system, TARGET2, has gradually replaced the original TARGET. The 2001 IMF assessment concluded that the three systems observed all the Core Principles for Systemically Important Payment Systems (CPSIPS). Finland was among the second wave of countries that migrated to TARGET2 in February 2008. TARGET2 provides harmonized payment services under a single shared platform across its member countries. In May 2009, the European Central Bank (ECB) released an assessment of TARGET2's design against the CPSIPS developed by the Committee on Payment and Settlement Systems. The report concludes that TARGET2 fully observes all relevant CPSIPS, although it does make certain recommendations pertaining to Principles III and VIII. The ECB in its function as the overseer of TARGET2 aims to ensure continued compliance of the system with the CPSIPS, and will regularly monitor the implementation of its recommendations by the system. A 2008 Financial Stability Report by the BoF asserts that POPS and PMJ fully observe the CPSIPS. While Finland does not have an overarching law on payment systems, a series of acts and regulations provide for an adequate legal framework in this area. Furthermore, the ECB asserts that the BoF follows the guidelines on payment systems set by the European System of Central Banks.

General Overview

Finland has three systemically important payment systems. The most significant, TARGET2, replaced Finland’s previous payment system, the Trans-European Automated Real-time Gross settlement Express Transfer (TARGET), in 2008. TARGET2 was phased into its member countries' systems in three groups -- November 2007, February 2008, and May 2008. Finland was part of the second group of countries. The other two payment systems are known as Pankkien on-line pikasiirrot ja sekit (POPS), which is a large-value payment system for express transfers and checks, and the retail payment system (PMJ). In 2009 the European Central Bank (ECB) released an assessment of TARGET2’s compliance with the Core Principles for Systemically Important Payment Systems (CPSIPS) as defined by the Committee on Payment and Settlement Systems. With the exception of one principle, which was not applicable due to the RTGS nature of TARGET2, all core principles were deemed to be “observed,” the ECB’s highest qualitative rating. Meanwhile, a 2001 Financial System Stability Assessment by the International Monetary Fund (IMF) declared that the POPS and PMJ systems were, at the time, in full compliance with the Core Principles for Systemically Important Payment Systems (CPSIPS) as well.

The 2007 ECB report titled "Payment and Securities Settlement Systems in the European Union: Euro Area Countries," (hereafter referred to as 2007 ECB report on Euro Area Countries) states that Finland has long used advanced payment technology to give it a highly efficient system of payments. The report also states that TARGET2 provides a harmonized service level with a single technical platform across its member countries, as opposed to the decentralized structure of its predecessor.

The 2007 report by the ECB titled "Fifth Progress Report on TARGET2 -- Annex 2: User Information Guide to TARGET2 Pricing," (hereafter referred to as the 2007 ECB TARGET2 -- Annex 2 report) notes that the Bundesbank (German central bank), Banca d'Italia (Italian central bank) and Banque de France (French central bank) provide TARGET2 participants with a single technical platform, called the Single Shared Platform (SSP). The report further indicates that despite the SSP, "TARGET2 is legally composed of national components governed by the national legislation of each participating member state. [Thus] the business relationship with the users and their accounts remain with the national central banks" (p. 4). Furthermore, national central banks (NCBs) are permitted to continue processing payments via their Proprietary Home Account application instead of the SSP for a four-year transitional period from when the country migrates to TARGET2, so as to allow participants more time and facilitate their change-over to the SSP.

Despite the transition to TARGET2, member countries' NCBs still have supervisory authority, and national legislation still holds significance. According to the 2007 ECB report on Euro Area Countries, "central banks monitor developments in the field of payment and settlement systems in order to assess the nature and scale of the risks inherent in these systems,” and “they define principles and standards for the promotion of safe, sound and efficient payment and settlement systems. They analyze and assess the extent to which the systems comply with these principles and standards" (p. 19). Per the same report, the Governing Council of the ECB adopted the CPSIPS as one of the standards the Eurosystem (the ECB and the national central banks of the euro area) must apply when performing its oversight role.

Finland does not have an all-encompassing law that governs all aspects of payment systems, according to the 2007 ECB report on Euro Area Countries. It instead has a number of separate regulations covering different payment systems areas. The 2007 ECB report on Euro Area Countries notes that the relevant provisions for regulating European Union (EU) area payment systems are put forth in the Treaty and the Statute of the European System of Central Banks (ESCB). The report also states that the main provisions of the Treaty and the Statute of the ESCB governing payment systems are Article 105(2) of the Treaty, and Article 22 of the Statute of the ESCB.

The 2007 ECB report on Euro Area Countries provides statistics on payment instruments in Finland as of 2005. Cash and non-cash payments are both extensively used in Finland, although cash use in national retail transactions and cash withdrawals through ATMs have both shown a declining trend in recent years. Among non-cash payments, credit transfers are the predominant means used in Finland. Checks have never been a popular payment media, and their use, in terms of volume, has seen a decline in recent years. Direct debit is also very marginally used. Internet banking has increased rapidly in recent years. Payment cards, including debit cards, delayed debit and credit cards, retailers cards, and prepaid cards, have been in use since the 1980s and are used in daily transactions, gradually replacing cash and almost completely replacing the use of checks. A number of small e-money service providers operate in Finland. There is only one ATM network in Finland, called "Otto." It has 1,689 ATM terminals in Finland.

Finally, the Single Euro Payments Area (SEPA) project is also worth mentioning in the context of the EU's integration of its payment systems. The SEPA project for retail payments "consists of a series of initiatives aimed at the introduction of common instruments, standards and infrastructures for retail payments in euro across Europe" (p. 28). According to the official SEPA website for Ireland, enabling legislation for the project will come into force across 31 countries in November 2009.

The Principles

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

According to the IMF's 2001 report, the Finnish Constitution, coupled with the EU laws and directives, provides the legal framework for a well-functioning financial system in the country. Finland also has a codified legal system. The scope of supervisory authority is circumscribed by constitutional law and its interpretations by the Constitutional Committee of Parliament.

In May 2009 the ECB released a report on an assessment of the design of TARGET2 against CPSIPS. The report rates Finland's level of compliance for this principle as “observed.” The document explains that “the legal framework of TARGET2 is clearly designed in a set of legal instruments and arrangements” (p. 5). Of such instruments, the most important in terms of oversight is the Guideline of the European Central Bank on TARGET2, which was adopted by the Governing Council on April 26, 2007. Other important EU regulations relating to payment systems are put forth in the Treaty and the Statute of the ESCB, the Cross-Border Credit Transfers Directive (Directive No. 97/5/EC) of January 27, 1997, and the Settlement Finality Directive (Directive No. 98/26/EC) of May 19, 1998.

According to the 2004 ECB assessment, the POPS systems fully observe this principle as well. The 2001 IMF assessment also finds all three SIPS in Finland (POPS, PMJ, and the precursor to TARGET2 known as BoF-RTGS) were fully compliant with this principle. This conclusion is reaffirmed by the BoF's assessment of the domestic payment systems, POPS and PMJ, as mentioned in its 2008 Financial Stability report.

As stated earlier in this report, from a legal perspective, TARGET2 is comprised of multiple payment systems, in which the ECB and each of the participating central banks operate their respective component, based on the SSP operated by the three providing central banks (Deutsche Bundesbank, Banque de France, and Banca d’Italia). The 2009 ECB assessment notes that "the ECB and the participating central banks maintain the contractual relationship with their respective participants" and that "detailed verification of the national implementation of the legal documentation in the national rules of TARGET2 component systems did not reveal any substantial concerns with an impact on the compliance with Core Principle I" (p. 5). The EU Settlement Finality Directive, which gives a clear definition of irrevocability and finality, has, according to the assessment, been fully implemented in each jurisdiction of the central banks participating in or connected to the system. Furthermore, arrangements for enforceability of collateral are ensured by means of the national laws implementing the Collateral Directive.

According to the ECB's 2007 Annual Report, the TARGET2 Guideline contains the main legal elements of TARGET2, including governance arrangements and audit rules, as well as transitory provisions on the migration from TARGET to TARGET2. The Guideline was published in the Official Journal of the European Union in September 2007 and is also available on the ECB’s website in all EU languages. The Guideline has a harmonized set of rules for all TARGET2 participants and allows Eurosystem NCBs to implement these rules in an identical manner, with deviations only if national laws require them. The harmonized conditions also contain relevant alternatives which will enable NCBs to customize their respective implementation in line with the requirements of national law. According to the ECB's 2007 Annual Report, "this approach implements the decision of the Governing Council of the ECB in October 2005 to legally construct TARGET2 as a multiple system, but aiming at the highest degree of harmonization of the legal documentation used by the central banks within the constraints of their respective national legal framework” (p. 27).

Finland does not have an all-encompassing law that governs all aspects of payment systems, according to the 2007 ECB report on Euro Area Countries. “Instead of a single payments systems act, there are a number of separate acts regulating various areas of the payment systems,” (p. 414) notes the report. These acts and directives cover the operations of foreign credit institutions in Finland, the use of cheques, cross border credit transfers, and settlement finality, among other issues related to payment systems. According to the 2007 ECB report on Euro Area Countries, “the Act on the Bank of Finland . . . . sets the national central bank the overall objective of maintaining the reliability and efficiency of payment systems and the broader financial system” (p. 415). The BoF is charged with oversight of the country’s payment systems, primarily by using the tools of “recommendations and moral suasion” (p. 415). Thus, it does not have the legal authority to issue binding regulations in this area.

The 2008 World Bank publication on payment systems worldwide indicates in its appendix that legal provisions in Finland cover: (1) clarity of timing of final settlement especially when there is an insolvency; (2) legal recognition of (bilateral and multilateral) netting arrangements; (3) recognition of electronic processing of payments; (4) the non-existence of any zero hour or similar rules; (5) enforceability of security interests provided under collateral arrangements and of any relevant repo agreements; and (6) protection from third-party claims of securities and other collateral pledged in a payment system.

FCII. 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.

In May 2009 the ECB released a report on an assessment of the design of TARGET2 against CPSIPS. The report rates the level of compliance for this principle as “observed,” its highest rating. According to the report, the TARGET2 Guideline “sets out provisions pertaining to the management of financial risks” (p. 5). Other sources of information on financial risks available to TARGET2 users include the User Detailed Functional Specification, the Information and Control Module, the User Handbook, the Manual of Procedures and the Information Guide.

According to the 2004 ECB assessment, the POPS system fully observes this principle. The 2001 IMF assessment also finds POPS and PMJ fully compliant with this principle. This conclusion is reaffirmed by the BoF's assessment of POPS and PMJ, as mentioned in its 2008 Financial Stability report. The 2004 ECB report further finds the design and operating hours of the POPS system are clearly spelled out, and the information provided enables the participants to have a clear understanding of the system's impact on each of the financial risks they incur through participation in it. The legal basis for the roles, rights, and responsibilities of the participants, the operator and the settlement institution is well explained and documented. Discretionary rules or changes in rules and procedures in abnormal circumstances are possible and are sufficiently explained. The 2001 IMF assessment also observes that the three systems have clear rules of operation and access criteria and they are readily available to interested parties. The 2007 ECB report notes that the rules of operation of the POPS and the PMJ are also clearly spelled out in the agreements between the participants in the respective systems and between each participant and the BoF.

FCIII. 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.

In May 2009 the ECB released a report on an assessment of the design of TARGET2 against CPSIPS. The report rates the level of compliance for this principle as “observed,” its highest rating. It further states that "owing to the RTGS nature of TARGET2 – where participants’ accounts are debited and credited simultaneously – no credit exposures among participants arise other than the risk entailed in the original exposures between the parties" (p. 6). Moreover, adequate collateral eliminates any credit risk for the central banks in relation to the provision of intraday credit to the participants. The ECB assessment notes that TARGET2 participants are provided with a number of tools for managing and economizing their liquidity requirements.

The 2007 ECB report on Euro Area Countries notes that "the following sources of liquidity can be used in TARGET2: balances on RTGS accounts, provision of intraday liquidity, and offsetting payment flows (i.e. the use of algorithms to settle a number of queued payments)" (p. 39). The report further states that intraday credit is granted to participants against eligible collateral by the respective national central banks. According to a 2005 report by the Bundesbank, TARGET2 has bilateral and multilateral limits that permit liquidity management for all TARGET2 participants.

According to the 2004 ECB assessment, the POPS system fully observes this principle. The 2001 IMF assessment also finds POPS and PMJ fully compliant with this principle. This conclusion is reaffirmed by the BoF's assessment of POPS and PMJ, as mentioned in its 2008 Financial Stability report. Regarding POPS, the 2007 ECB report finds that "the overall maximum credit risk accepted by any bank is the sum of the bilateral credit limits it has granted" (p. 426). However, the risk involved is considerably reduced since the system uses gross settlement for large value and bilateral positions and because the debit/credit bilateral positions continuously change during the day. The participants directly interchange information on the position of bilateral payments as well as the payments settled on a gross basis. The 2007 ECB report finds the PMJ free of credit risk, since the banks using the system credit their customers only after final interbank settlement. The same report states that PMJ liquidity risk is eliminated by the fact that account holders have access only to funds equal to the minimum reserves held in the settlement accounts.

FCIV. 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.)

In May 2009 the ECB released a report on an assessment of the design of TARGET2 against CPSIPS. The report rates the level of compliance for this principle as “observed,” its highest rating. The assessment further states that "unless instructing participants have indicated the settlement time, accepted payment orders shall be settled immediately or at the latest by the end of the business day on which they were accepted, provided that sufficient funds are available on the payer’s RTGS account and taking into account: (1) any bilateral or multilateral liquidity limits that a participant has set for the use of available liquidity for payment orders in relation to other TARGET2 participants; and (2) liquidity reservations for highly urgent or urgent payment orders" (p. 7). Those payment orders that are unable to be settled by the cut-off times are returned as unsettled.

According to the 2007 ECB report on Euro Area Countries, the EU's Settlement Finality Directive of 1998 harmonized laws in member states and thereby ensures that the operations of payment and settlement systems are not stopped by the bankruptcy of a participant. Furthermore, the report also states that unless otherwise indicated by the participant, payments in TARGET2 are settled immediately or at least by the end of the business day.

According to the 2004 ECB assessment, the POPS system fully observes this principle. The 2001 IMF assessment also finds POPS and PMJ fully compliant with this principle. This conclusion is reaffirmed by the BoF's assessment of the POPS and PMJ payment systems as mentioned in its 2008 Financial Stability report. Both payment systems provide continuous settlement throughout the day, according to the BoF. The 2007 ECB report notes that the POPS settles "payments that exceed the bilaterally agreed credit limits . . . on a gross basis directly in BoF-RTGS," (p. 425-426) which is now TARGET2, and single payments within the credit limits on a net basis for intraday settlement. As for PMJ, payments in the system are settled simultaneously on a gross basis in TARGET2.

IIV. 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.)

This principle is not applicable to TARGET2, as it is a system that provides RTGS services. Nor is this principle applicable to the POPS system, according to the 2004 ECB assessment. The PMJ system, according to the 2007 ECB report, settles bilaterally and "these positions are booked on a gross basis and settled simultaneously" (p. 427).

FCVI. 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.

In May 2009 the ECB released a report on an assessment of the design of TARGET2 against CPSIPS. The report rates the level of compliance for this principle as “observed,” its highest rating. The assessment further states that "payments processed in TARGET2 are settled in central bank money in the accounts of the direct TARGET2 participants" (p. 7). The 2008 World Bank publication on payment systems worldwide reiterates this point in its appendix, noting that RTGS payments in Finland have been operated by the central bank since 1991.

According to the 2004 ECB assessment, the POPS system fully observes this principle. The 2001 IMF assessment also finds that POPS and PMJ are fully compliant with this principle. This conclusion is reaffirmed by the BoF's assessment of the domestic payment systems as mentioned in its 2008 Financial Stability report. The 2004 ECB report explains that since all payments settle in the books of the central bank, there is no credit risk or liquidity risk with respect to the settlement agent or settlement asset. The 2001 IMF assessment also reaches the same observation for both systems, that is, they settle in central bank money.

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

In May 2009 the ECB released a report on an assessment of the design of TARGET2 against CPSIPS. The report rates the level of compliance for this principle as “observed,” its highest rating. The objectives of the information security policy for TARGET2 and the tools and procedures for achieving these objectives are defined in the TARGET2 Risk Management Framework (T2RMF). The 2009 ECB assessment states that "the main objective of information security is to protect TARGET2 business processes and any related information from a wide range of threats, whether internal or external, deliberate or accidental, and to minimize the impact on the business continuity of TARGET2 of any threats that, despite all measures taken, do materialize" (p. 8). The T2RMF is comprised of three levels: the first level describes the systems’ high-level security policy principles and requirements, the second level specifies concrete security requirements and controls, and the third level describes in detail the risk management process, including the conduct of regular risk assessments and the reporting structure.

Furthermore, the 2007 ECB report on Euro Area Countries notes that "TARGET2 [offers] the highest possible level of reliability and resilience, as well as sophisticated business contingency arrangements commensurate with the systemic importance of the TARGET2 infrastructure" (p. 37).

According to the 2004 ECB assessment, the POPS system fully observes this principle. The 2001 IMF assessment also finds that POPS and PMJ are fully compliant with this principle. This conclusion is reaffirmed by the BoF's assessment of the domestic payment systems as mentioned in its 2008 Financial Stability report. The 2004 ECB report adds that the systems have a security policy in place, which coincides with the TARGET risk management methodology, which makes use of an international standard (ISO 17799) for its security requirements. Finland also applies a national methodology in consonance with international standards. A secondary contingency site is available, and the infrastructure is tested periodically. Change management procedures are also implemented in the systems. Disaster recovery procedures are well documented and properly explained. The 2001 IMF assessment judges POPS and PMJ to have high security and operational reliability.

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

In May 2009 the ECB released a report on an assessment of the design of TARGET2 against CPSIPS. The report rates the level of compliance for this principle as “observed,” its highest rating. The report also notes that TARGET2 meets the business needs of its users, ensures high levels of processing capacity, performance and resilience, and bases its pricing policy on a sound cost methodology. The report further states that "the pricing policy [for TARGET2], which has been agreed by the Governing Council [of the ECB], aims at achieving two main objectives: first, ensuring wide participation in the system, through a pricing scheme which is attractive both for big players and smaller institutions; second, ensuring full cost recovery, taking into account a public good factor" (p. 10).

According to the 2004 ECB assessment, POPS fully observes this principle, with no pricing problems. The 2001 IMF assessment found POPS and PMJ to be fully compliant with this principle. This conclusion is reaffirmed by the BoF's assessment of the domestic payment systems as mentioned in its 2008 Financial Stability report.

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

In May 2009 the ECB released a report on an assessment of the design of TARGET2 against CPSIPS. The report rates the level of compliance for this principle as “observed,” its highest rating. The report further notes that the access/exit criteria for the systems are clearly and explicitly stated and publicly disclosed in the TARGET2 Guideline. Direct participation in TARGET2 is permitted to: (1) credit institutions established in the European Economic Area (EEA); (2) credit institutions established outside of the EEA, provided that they act through a branch established in the EEA; and (3) central banks of EU Member States and the ECB. The ECB and the central banks, on an ongoing basis, verify that their respective participants continue to abide by the system's access criteria.

According to the 2004 ECB assessment, the POPS system fully observes this principle. The access criteria for POPS are set out in the membership agreements and are restricted to credit institutions. As for the fee-structure, the 2004 ECB report observes that it "is intended to recover costs and is seen as not preventing fair and open access to the systems" (p. 15). The fees are a combination of a one-time access fee, a monthly fee, and a transaction fee. The 2001 IMF assessment finds both POPS and PMJ to be fully compliant with this principle. This conclusion is reaffirmed by the BoF's assessment of the domestic payment systems as mentioned in its 2008 Financial Stability report.

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

In May 2009 the ECB released a report on an assessment of the design of TARGET2 against CPSIPS. The report rates the level of compliance for this principle as “observed,” its highest rating. The report notes that the ownership, decision-making structure, and operational function are adequately specified in the relevant system documentation. The 2009 ECB report notes that "there are three separate levels of governance for both the establishment and the operational phases of TARGET2 . . . Level 1 (Governing Council of the ECB) has final competence in relation to TARGET2 and safeguards its public function. Level 2 (Eurosystem CBs) has subsidiary competence for TARGET2 in relation to issues left to its discretion by Level 1, while Level 3 (SSP providing CBs) builds and operates the SSP" (p. 11). The Governing Council is responsible for the direction, management and control of TARGET2.

According to the 2004 ECB assessment, POPS fully observes this principle. Information on the operation of the systems and decision making procedures are made available to the public. However, there are no formal conflict resolution procedures to deal with disagreements between the users and the operators of the system. Also, no business plans have been worked out. Consultation with users, auditors, and overseers are done only on an ad hoc basis. The 2001 IMF assessment also finds POPS and PMJ to be fully compliant with this principle. This conclusion is reaffirmed by the BoF's assessment of the domestic payment systems as mentioned in its 2008 Financial Stability report.

FCA. 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.

According to the 2001 IMF assessment on payment systems, “The Bank of Finland maintains a transparent approach in discharging its payment [system] oversight roles” (p. 53) and laws and regulations related to payments systems are publicly available. Furthermore, according to the report, “the Bank of Finland has published a number of informative background articles on the Finnish payments system, on how the Bank of Finland discharges its oversight responsibility in relation to it, and on how that oversight role contributes to the Bank of Finland’s overall responsibility for promoting the stability and efficiency of the overall financial system” (p. 53).

As stated in the 2007 ECB TARGET2 -- Annex 2 report, despite the transition to TARGET2, member countries' national central banks still have supervisory authority and national legislation still holds significance. The 2007 ECB report on Euro Area Countries states that "central banks [in the EU countries] monitor developments in the field of payment and settlement systems in order to assess the nature and scale of the risks inherent in these systems and to ensure the transparency of the arrangements concerning payment instruments and services. Where necessary, they define principles and standards for the promotion of safe, sound, and efficient payment and settlement systems. They analyze and assess the extent to which the systems comply with these principles and standards" (p. 19). The report also finds that the 1998 Act on the Bank of Finland charges the BoF with the objective of "maintaining the reliability and efficiency of payment systems and the broader financial system" (p. 415). As part of its payment system oversight responsibility, spelled out in the Act on the Bank of Finland, the BoF is obliged to "help to maintain the reliability and efficiency of payment systems and the financial system in general, and assist with the development of such systems" (p. 415). As part of the operational objective of the payment systems oversight, the BoF promotes the RTGS system usage for transferring large-value payments and ensures that the payment systems comply with the BoF and Eurosystem's oversight standards.

The 2008 World Bank publication on payment systems worldwide indicates in its appendix that the Bank of Finland’s payment system oversight functions are established by law and performed regularly, noting that the oversight activities are segregated from operational activities.

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

The 2007 ECB report on Euro Area Countries notes that in 2001 the Governing Council of the ECB adopted the CPSIPS as one of the standards the Eurosystem must apply when performing its oversight role. The 2008 World Bank publication on payment systems worldwide indicates in its appendix that Finland performs payment system oversight over all systemically important payment systems. Per the 2007 ECB report, the Act on the Bank of Finland gives the BoF the task of the oversight of the payment systems in the country. Specifically, the Financial Markets and Statistics Department within the BoF is responsible for payment system oversight and formulation of general policy in this area. The 2008 BoF Financial Stability report affirms that all the SIPS in Finland comply with the CPSIPS.

FCC. 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.

The 2007 ECB report on Euro Area Countries notes that in 2001 the Governing Council of the ECB adopted the CPSIPS as one of the standards the Eurosystem must apply when performing its oversight role. The 2008 World Bank publication on payment systems worldwide indicates in its appendix that Finland performs payment system oversight over all systemically important payment systems.

Per the 2007 ECB report on Euro Area Countries, the Act on the Bank of Finland gives the BoF oversight of the payment systems in the country. Specifically, the Financial Markets and Statistics Department within the BoF is responsible for payment system oversight and formulation of general policy in this area and the development of the PMJ and POPS. The 2008 BoF Financial Stability affirms that all the SIPS in Finland comply with the CPSIPS.

FCD. 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.

The 2007 ECB report on Euro Area Countries states that "in order to institutionalize cooperation and the exchange of information regarding large-value payment systems in the EU, banking supervisors and payment system overseers from all EU Member States concluded a memorandum of understanding, which came into force on 1 January 2001" (p. 106). The Bank of Finland’s 2007 Annual Report stated that “The Bank of Finland is an active and constructive member of the Eurosystem” and that it “carries out its stability function in close cooperation with domestic and foreign authorities” (p. 9).The 2008 World Bank publication on payment systems worldwide confirms a high level of cooperation from the Bank of Finland, stating in its appendix that “cooperation is ensured through a formal mechanism” (p. 234) and that it involves regular meetings, information and opinion exchanges, and joint inspections. Further, according to the 2007 ECB report, the BoF cooperates with the Finnish Bankers' Association (now the Federation of Finnish Financial Services) as it engages in the development of POPS and PMJ. These development activities aim to "improve the efficiency of payment systems; to reduce payment service providers' exposure to risks associated with payment systems and instruments; and to ensure that payment systems meet the relevant minimum standards, in particular the oversight standards of the Eurosystem" (p. 416).

The 2000 ECB report notes that "the Eurosystem favors a cooperative approach towards the enforcement of the oversight policy stance" (p. 3), wherein the national central banks or the NCBs (in Finland's case the BoF) liaise with other NCBs in conducting oversight, and coordinate their oversight activities through pertinent committees and working groups, notably the ESCB's Payment and Settlement Systems Committee and its various working groups.