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The Evolution of The National Payment systems
in Egypt
Manama 15-17 March 2005
Contents• Objectives of the modernisation project of the CBE
• Design of the Target National Payment System
• Implementation Strategy of the Target National Payment System
• Creation of the Payment System Department
• The Automation of Clearing Houses
• Development of the enhancement of systemically important payment system
• Integration of the T-bills transactions settlement into the Fin copy system
• Development the link between the MCSD’s securities
Clearing system and the FIN-Copy system.
• Egyptian Law and regulations related to the Payment Systems• The Way Towards Real Time Gross Settlement RTGS• The Red Book
Objectives of the modernisation project of the CBE
• Ensure proper execution of all types of payments
• Reduce the delay of the payment process
• Increase the level of security
• Progressively applying the international standards in terms of rules and systems
• Restore confidence in the payment system towards its users
• Promote the use of payment instruments in order to progressively reduce cash payments
• Implement the RTGS to have a better control economic indicators and set up the base of a sound monetary policy
Central AccountingSystem
RTGS
NationalClearing System
Book-EntrySystem
MCSDsystem
RT RT
End-of-Daypostings
CBECBE
CASECASETradingsystem
ClearingClearingBankBank
BrokerBroker
Book-keeperBook-keeper
CardSwitch
Book-keeperBook-keeperBankBank
BankBank
DTDT
PrimaryPrimaryDealerDealer
InvestorInvestor
CBECBEParticipantParticipant
MCSDMCSD
RT
DT
DT
Design of the Target National Payment System
Overall design
Principle: grouping of all payments executed on banks’ accounts at the Central Bank
The Target National Payment System
Implementation strategy
Priority 1:Creating a Department responsible of the management ofthe Payment System at the CBE
Priority 2: Implementation of the National Bulk Payments Clearing System
Installation of Alexandria and Port Said Creation of the Interbank Card Authority
Creation of the Legal Task Force
Priority 3: Development of the enhancements to the Systemically- important payments system
Development of the link between MCSD’s securities Clearing system and the FIN-Copy system
Contacting State Authorities to obtain their support for the implementation of the measures to increase cash-less payments
Priority 4:
• Integration of the T-bills transactions settlement into the Fin-Copy system
Integration of the Cross-border transactions cover in Egyptian pounds into the Fin-Copy system
Creation of the Payment Systems Department
The PSD Mission
To manage the various projects related to the implementation of the National Payment System’s modules.
To ensure the continuous follow-up and supervision of the system and permanently watch the liquidity in the system.
To be the constant contact at the Central Bank of Egypt for banks and the National Payments Council
Banking Operation SectorBanking Operation Sector
Port Said brPort Said br
Payment systems Payment systems Dept.Dept.
Cairo Br.Cairo Br.
Payment Systems Dept. OrganizationPayment Systems Dept. Organization
Alex Br.Alex Br.Moh. Br.Moh. Br.
Executive Manager
NPC unit
Oversight section
High value Payment section
Swift operation RTGS operation
Bulk clearingPayment section
Clearing Houses +
Data base for cards
Sub-governor for banking operations sector
The Clearing Houses Statues
- Cairo Clearing Has been automated since June 2002
-Developing the methods of checks processing in commercial banks.
- By June 2005, the clearing houses of Alexandria and Port Said will have been automated.
-Establishing an advanced network between the head offices of banks and their branches; and between banks and the Central bank.
Design of the Target National Payment System
The National Bulk Payments Clearing System
consolidation
RTGS
Central
Accoun-ting
or
AssioutClearing House
Local Processing
Port SaidClearing House
Local Processing
CairoClearing House
Local Processing
AlexandriaClearing House
Local Processing
Bank ALocal Branch
Bank ALocal Branch
Bank ALocal Branch
Bank BLocal Branch
Clearing Houses Network Central Processing
Bank CLocal Branch
CairoBank BLocal Branch
Bank BLocal Branch
Bank CLocal Branch
Architecture
CBE’s Gross settlement system today
FIN-Copysystem
S.W.I.F.T.Network
CBT, SingleBIC address
HeadOffice
Branch
Branch Branch
Branch
CBT, SeveralBIC addresses
HeadOffice
Branch
Branch Branch
Branch
HeadOffice
Branch
Branch
Branch
Branch
CBT
CBT
CBT
CBT
CBT
• Real-time finality of payments guaranteed by the regulation of the system• Deferred posting to banks’ accounts
Intraday Liquidity Management time-frame Till Jan.2003
2:30pm
D
4:00pm
10:00pm
CoverPeriod
D-1Balance
Cen
tral
Acc
oun
tin
gS
yste
m
Intr
aday
Liq
uid
ity
Man
agem
ent
Sys
tem
FIN
-Cop
yS
yste
m
DOpeningBalance
NoReal-Time Monitoring and Updatesfor Central Bank operations
NoReal-Time Monitoring and Updatesfor Central Bank operations
3:00pm
Impacts of FIN-Copy paymentorders
Impacts of Clearing Systems and Cover
payments
DTemporary
BalanceClosing
Manual Entry of daily postings Manual Entry of daily postings D
Balance
2:30pm
4:00pm
10:00pm
DailyEntriesBatch
Exchanges of payment orders in the FIN-Copy system Exchanges of payment orders in the FIN-Copy system
(Step1) Intraday Liquidity Management time-frame after Jan.2003
2:30pm
D
4:00pm
10:00pm
CoverPeriod
D-1Balance
Cen
tral
Acc
oun
tin
gS
yste
m
Intr
aday
Liq
uid
ity
Man
agem
ent
Sys
tem
FIN
-Cop
yS
yste
m
DOpeningBalance
Real-Time Monitoring and Updatesfor Central Bank operations
Real-Time Monitoring and Updatesfor Central Bank operations
3:00pm
Impacts of FIN-CopyPayment orders
Impacts of ClearingSystems and Cover payments
DTemporary
BalanceClosing
Manual Entry of daily postings Manual Entry of daily postings D
Balance
2:30pm
4:00pm
10:00pm
DailyEntriesBatch
2:00pm
12:00am
10:00am
8:00am
Exchanges of payment orders in the FIN-Copy system Exchanges of payment orders in the FIN-Copy system
Temporary Impacts of FIN-Copy payment orders
Collecting Gov. receipts-Taxes on Sales- FIN Copy System
The receipts of the taxes on sales from the customers’ accounts at the different banks transferred to the accounts Ministry of Finance (crediting taxes on sale) at the Central Bank via the FIN Copy System
Securities Settlement Systems• The clearing and delivery versus payment of listed
securities transactions including treasury bonds transactions are processed by a private company Misr for Clearing, settlement and Central Depository (MCSD). The payment of the cash-legs is ensured by the clearing banks (presently NBE and Misr), as well as the settlement of the final clearing balance between them.
• In order to ensure finality of payment, the final clearing balance between the Clearing banks is settled through bilateral accounts, but by means of the system prepared by the Central Bank for systemically-important payments (FIN-Copy) mechanism, then RTGS.
• This settlement mode allows the DVP process to comply with highest international standards, thus giving confidence to international investors to operate in the Egyptian market.
ClearingClearingBanksBanks
Participant systemParticipant system
MCSD SystemFunctions
MCSD Central systemMCSD Central system
Book-Entry SubsystemBook-Entry Subsystem
Settlement SubsystemSettlement Subsystem
Matching SubsystemMatching Subsystem
Book-keeping SystemBook-keeping System
Communication Link
OrderCapture
IssuanceManagement
Payment Orders
Securities Settlement Systems cont.
• The CBE manages the public debt on behalf of the government. It supervises the issue of government securities, establishing the amount , maturity and interest rate. The CBE also acts as central depository for such securities. Cash settlement of transactions takes place on accounts held with the CBE.
• The T-Bills is fully processed by means of a dedicated system and the cash legs is settled by CBE through the FIN Copy system
CBE Book-entrysystem Functions
CBE Central systemCBE Central system
Book-Entry SubsystemBook-Entry Subsystem
Settlement SubsystemSettlement Subsystem
Matching SubsystemMatching SubsystemOrderMatching
Capture SubsystemCapture Subsystem Auctions and OrderCapture
IssuanceManagement
Participant systemParticipant system
??
FIN-Copy systemFIN-Copy system PaymentOrders
Accounting SystemAccounting System
The RTGS Pilot Project
The RTGS pilot project was conducted for two months from March to May 2003 between the biggest five banks in Egypt. The project provided access to the banks via the CBE’s private network together with the SWIFT network.
InfrastructureInfrastructure
"V" "V" schemescheme
CBE
Payment instruction
Authorized Payment instruction
Confirmation of debit
Bank ABank A Bank BBank B
SWIFT
Delivery mechanismsDelivery mechanisms
Private network(MT)
Bank ABank A Bank BBank B Bank Bank CC
Bank DBank D
Egyptian Laws and regulation Related to the Payment Systems
“The Banking Law”Article (6) in the Law No.88 of 2003 stipulates that the CBE may exclusively perform the following tasks: “…Oversight of the National Payment Systems.” and as a result the PSD was established.
Egyptian Laws related to the Payment Systems Cont.
-The board of the Central Bank of Egypt (CBE) approved on 28 February 2002 the supervisory regulations to be applied in all banks operating in Egypt when offering electronic banking services and issuing e-money payment instruments.
-Anti-money laundering Law no. 80 (2002)and in 2003 the board of the CBE approved supervisory regulations applicable to all banks.
Egyptian Laws related to the Payment Systems Cont.
-The Executive Regulations of the Electronic Clearing House .
-The Law no. 15 for 2004 concerning the Digital Signature was promulgated and the Executive Regulations is Underway.
The Way towards Real Time Gross Settlement (RTGS)
• We obtained aid from the European Union to implement the RTGS.
• We expect launching the tender in May 2005 and the cut-off date will be effective August 1, 2006.
Overall architecture of RTGS system and its interfaces
Cross-borderpayments
sub-system
CBE’sBook-entry
system
CentralDepository
systemACH
Network interface
External systemsinterfaces
Accountsmanagement
Participantsmanagement
Message handlingfunctions
SystemAdministration
Settlementengine
QueueManagement
engine
CentralAccounting
system
Accesscontrol functions
Middleware
SWIFT
RDBMS
Central Bank’sDepartments
Commercialbanks
RTGS
Cross-borderpayments
sub-system
CBE’sBook-entry
system
CentralDepository
systemACH
Network interface
External systemsinterfaces
Accountsmanagement
Participantsmanagement
Message handlingfunctions
SystemAdministration
Settlementengine
QueueManagement
engine
CentralAccounting
system
Accesscontrol functions
Middleware
SWIFTSWIFT
RDBMS
Central Bank’sDepartments
Commercialbanks
RTGS
Study about Debit and Credit Cards in Egypt
• In 2004, the following facts have been realized:
- The number of Automated Teller Machines (ATMs) reached 1200, increasing annually by 40%.
- The number of Points of Sale (POS) reached 13815, rising annually by 31%.
Contd.
- The number of credit cards reached 800,000 with an annual growth rate of 23%.
- The number of debit cards amounted to 1,795, 788, increasing annually by 30%.
YEARNumber of Debit cards
Change 30%Number of Credit Cards
Change 23%otal Cards
2000473,812352,168823,143
2001676,874433,1671,106,661
2002966,963532,7951,495,892
20031,381,375652,8732,034,248
20041,795,788803,0342,778,400
20052,334,524987,7323,812,505
20063,034,8811,214,9105,254,336
20073,945,3451,494,3397,270,719
20085,128,9491,838,03710,098,260
20096,667,6332,260,78614,072,905
Prospective Study of the Number of cards until 2009
Clearing Houses Activity in the Central Bank
FYNo. of Cheques (Thousands)
Value of Cheques(Millions)
Change Rate
%Value
98/9983773502463.48.1
99/200085553380832.1)3.5(
2000/20018228292168)3.8()13.6(
2001/20027918270543)3.8()7.4(
2002/20031002524458126.6)9.6(
2003/20049591248224)4.3(1.5
Coming Soon: The Red Book
• The Central Bank of Egypt has started discussing with the Bank of International Settlements (BIS) about compiling the Egyptian Red Book. And the process is currently underway.
