What is the CLS payment system?

2016-06-11 00:00:00

The emergence of electronic money was the foundation for the emergence of the corresponding payment systems. Otherwise, the virtual currency could not fulfill its functions. Such widely known as Webmoney, Yandex.Money, Qiwi, have firmly entered the rhythm of modern computer life. Digital currency users are now able to make transactions online.

As for the above services, we can say with confidence that they are developing and improving well. Provide their customers with convenient tools to use, perform the necessary operations with them. In recent years, many new ones began to appear, but not all of them are successful. Some try hard to survive, many disappear, leaving no trace behind.

 

CLS payment system is of great interest

Among them there are those that arouse uneasy interest, being a network for multicurrency netting. These include the CLS payment system. It is a platform for conducting financial transactions on a global scale. The creators of CLS Bank are dealers of the G20. Having received a permit for the legal performance of its functions issued by the US government in 1999, its capabilities and powers have significantly expanded. And by 2002, it had acquired an unprecedented scale: it included 67 financial structures from 17 states, which became shareholders.

With such powerful support as the European Central Bank, CLS Bank, making international settlements, acquired a special status controlled by the central financial institutions of several countries and the Federal Reserve.

With the advent of Bank CLS in Forex, the Herstatt risk was eliminated. This was possible thanks to the payment-versus-payment method. A monetary transaction is carried out in the balancing mode of two currencies. CLS Bank is the third trustee of the transaction.

Since 2002, CLS has used 7 types of currencies, soon more than a dozen joined them. The settlement scheme in this system consists in conducting financial transactions through a currency conversion settlement institution. Here, the threat to the safety of the transferred amount of money is absolutely excluded, because the principle works in this way: payment for the purchased currency is made only after the purchased one arrives. This option helps to prevent the risks that are likely to occur in the conduct of monetary transactions, and is a solid protection of clients money resources.

 

Principles of settlement in the CLS payment system

Only founders are allowed to require the bank to carry out a settlement transaction in accordance with the instruction they send to CLS Bank. Moreover, its completion occurs immediately on the multicurrency accounts of the founders, which fully guarantees compliance with the deadlines specified by the client.

For other users, they only have to make their settlements through the settlement accounts of the founders. There are no other options for transactions.

Timeframes are set for each national currency according to local time. The transaction is carried out as follows:

• In accordance with European time at 00.00 hours the dealer submits an instruction to the bank with a plan for subsequent transactions.
• CLS Bank at 6.30 am calculates the net positions of the participants in the transaction for each currency and prepares the distribution of data on transactions to the rest of the participants in the form of a table.
• Money transfers are made from 7.00 to 12.00.

One trading day CLS Bank allows using only 7 national RTGS systems. For Australia, for example, the settlement time is typical for the evening session. CLS Bank members make their payments between themselves using the net system, and between users and the bank using the gross system.

More than half of all conversions in various currencies are carried out through the CLS. 579 conversion transactions take place per day, the turnover amount is more than 3.45 trillion US dollars. The highest rates of the CLS payment system were recorded in 2008, when a huge amount of one quadrillion American dollars passed through its accounts. With a record number of conversion operations - 142 million.

Until 2015, there was a significant restriction on the use of various types of currencies, and by the end of 2015 it had almost reached 20. This indicates the growing popularity of this system, which many states, including Russia, want to join.

 

Position of the Russian Federation towards the CLS payment system

As mysterious or incomprehensible as the CLS system may seem, it attracts the attention of the Central Bank of Russia. And there are many supporters in this direction. Yes, in fact, there should be no opponents here, because the CLS payment system will greatly facilitate the fate of Russians. If the Russian ruble is included in this system, it will provide it with convertibility, and, moreover, full, and not partial, as it is now. Russian citizens, especially tourists and businessmen, will part with the problem of exchanging their national currency in another country. After all, for now they have to exchange money in advance for the desired currency. The only exception is Finland, where even now you can exchange rubles for the currency of this state.

It is difficult to say when the connection will take place. It may take years, perhaps much less. If this happens, then the turnover of commercial capital across the border of the Russian Federation will increase. This will entail an increase in the fluctuation of the "floating" ruble. And the price of international money transactions with Russian rubles will decrease significantly.

The Central Bank of Russia will be on a par with the New York Federal Reserve Bank and sixteen world-class central banks and financial institutions. The Central Bank will be obliged to allow non-residents to open current accounts in Russian rubles, as well as to provide netting for transactions. It is planned to open an international financial center in Moscow, within the framework of which the OECD will be joined to Russia.