1. Overview of Large Value Payment System Oversight in Vietnam
BANKING ACADEMY OF VIETNAM
Overview of Large Value Payment System Oversight in Vietnam
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Hanoi, October 2016

2. LEGAL BASIS FOR SBV OVERSIGHT FUNCTION
SBV is mandated by law to regulate and oversee payment systems and instruments. The Law on State Bank of Vietnam provides the central bank with the following powers and mandates:
Organize, manage, operate and supervise the national payment system.
Organize and supervise the operation of payment systems in the economy.
Administer payment instruments in the economy.

3. LEGAL BASIS FOR SBV OVERSIGHT FUNCTION (Con’t)
 The authority to oversee payment systems is further elaborated in some government decrees and SBV circulars  As explicit from the law and regulations, the central bank payment system oversight aims at ensuring the smooth and efficient functioning of the payment systems.

4. OVERVIEW OF VIETNAM’S PAYMENT AND SETTLEMENT SYSTEMS
The IBPS run by SBV, the securities settlement system operated by Vietnam Securities Depository, and FX settlement system managed by Vietcombank are considered as three systemically important FMIs currently operating in Vietnam.
Systemically important FMIs in Vietnam
Payment systems and Central bank Bills
Corporate securities, Government bonds, and Treasury Bills
FMIs
- IBPS (Payments system).
- SBV CSD (CSD + SSS for Central bank bills).
- Vietcombank FX system (Payments system).
VSD (CSD + SSS)
Operators
SBV
Vietnam Securities Depository
Regulators
State Securities Commission
Regulators Responsibilities
Regulation and Oversight
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5. OVERVIEW OF VIETNAM’S PAYMENT AND SETTLEMENT SYSTEMS (Con’t)
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6. OVERVIEW OF VIETNAM’S PAYMENT AND SETTLEMENT SYSTEMS (Con’t)
The IBPS is designed to process high-value payments (HVSS component) as well as low-value payments (LVSS component).
The IBPS is operated through a National Payment and Settlement Center (NPSC) and five regional processing centers (RPC).
The IBPS is the backbone payment system in Vietnam, including two sub-systems:
High-value payment system conducts real time gross settlement (RTGS) large-value payments (The threshold for high-value payments is VND 500 million - about USD ) and urgent payments.
Low-value payment system processes deferred net settlement (DNS) to clear under VND 500 million payments.
Since the launch of the system, the value of transactions settled has been growing exponentially.
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7. OVERVIEW OF VIETNAM’S PAYMENT AND SETTLEMENT SYSTEMS (Con’t)
There are 97 direct members, 359 member units and 2011 indirect members participating into the IBPS, mostly banks.
Operating time of this system: Monday – Friday
Low-value payment: 8.00 am – 4.00 pm
High-value payment: 8.00 am – 5.00 pm
After 5.00 pm, conducting data comparison, operating time of the last two days of the month is extended to be more 30 minutes.
The system deal with transactions on average per day with the value of VND billion per day.
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8. OVERVIEW OF VIETNAM’S PAYMENT AND SETTLEMENT SYSTEMS (Con’t)
Transactions through the IBPS have grown exponentially over the last ten years.
Year 2014 sees 47.7 million items processed with the total value of VND 46.6 trillion, 12 times GDP of same year.

9. THE COVERAGE, TOOLS AND MECHANISMS OF OVERSIGHT FOR THE IBPS
The oversight activities touch upon all the important payment systems and payment instruments in the economy with the oversight focus given to the IBPS. Other payment systems/instruments which also attract the oversight interests are domestic card switch systems, FX settlement system, securities settlement system, ATM networks run by big banks and e-wallet providers.
The oversight methods mostly deal with monitoring and assessment.
The approach to the oversight job is mainly compliance-based while the capability for risk based approach needs time and more resources to develop.
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10. THE COVERAGE, TOOLS AND MECHANISMS OF OVERSIGHT FOR THE IBPS (Con't)
Oversight tools for the IBPS are mainly focused to remote monitoring, on-site visits.
Online, continuous monitoring has been exclusively undertaken for the IBPS since 2011 through a dedicated monitoring application.
A dedicated division for payment system oversight was established within the Payment System Department in 2007 to take care of the IBPS and other payment systems.
In 2012, the IBPS was assessed against 24 principles for financial market infrastructures (PFMI) within the FSAP for Vietnam, jointly conducted by the World Bank. Recommendations from the Detail Assessment of Observance are useful to SBV as the regulator of the IBPS, motivating the Bank to induce changes to the system.
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11. THE CURRENT CHALLENGES IN THE OVERSIGHT IMPLEMENTATION FOR THE IBPS
Legal framework for payment and settlement systems are not complete, not specifically dealing with some critical issues such as settlement finality, legal validity of multi-lateral netting, clearly defined responsibilities of relevant authorities over important FMIs…
The IBPS oversight is not fully-automated and sophisticated enough.
Oversight capability and resources given to the oversight function are still limited.
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12. THE CURRENT MEASURES IN OVERCOMING THE CURRENT CHALLENGES FOR IBPS OVERSIGHT
Developing comprehensive legal framework for payment and settlement systems as the basis for the effective oversight function of the IBPS as well as other important FMIs.
Deploying a modern, integrated oversight module together with standard operating oversight manual for the effective and comprehensive oversight of the IBPS in the next IT upgrade.
Enhancing oversight capability through adequate staffing, increased training and international cooperation.
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13. FUTURE PLAN/ GOALS FOR BETTER IMPLEMENTATION OF IBPS OVERSIGHT
Implementing payment systems oversight strategy approved in 2014 , focusing on the IBPS and other important FMIs.
Making the IBPS subject to the observance of Principles for Financial Market Infrastructures.
Planning for the drafting of a Payment and Settlement Act mandating the SBV clearly defined authority, tasks and responsibilities over the payment system oversight for the smooth and efficient operation of payment and settlement systems.
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