UK banks to sign up for payment system?

5 July 2011

Lenders in the UK may be about to sign up for a new payment system that could serve to shore up financial stability across the banking sector.

The Bank of England (BoE) - the central bank of the nation - has said it would like to see more institutions joining the initiative, as just 18 direct members of the real-time settlement system Chaps are currently serving the sterling banking industry.

Speaking in Leeds, Chris Salmon - the BoE's chief cashier and executive director for banking services - said the recent financial crisis revealed the risks that are apparent when not every bank is a direct member of this kind of set-up.

The industry figure noted excessive tiering creates unnecessary potential problems, adding the BoE is to encourage change by speaking to the banks - and their supervisors at the Financial Services Authority - directly.

"But if membership does not increase and tiering continues to be a significant issue for the UK, the Bank may consider recourse to more formal actions," Mr Salmon added.

By Claire Archer

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