Settlements effected through the Bank of Russia settlement network are based not only on paper, but also electronic payment documents. These are the so-called intra- and interregional electronic settlements. The latter are regulated by the Provisions on Inter-Regional Electronic Settlements Effected through the Bank of Russia Settlement Network. The exchange of electronic documents through the Bank of Russia settlement network is regulated by the Provision on the Rules of Exchange of Electronic Documents between the Bank of Russia, Credit Institutions (Branches) and Other Clients of the Bank of Russia in Effecting Settlements through the Bank of Russia Settlement Network, adopted in March 1998.
The divisions of the Bank of Russia settlement network participate in electronic settlements as the bodies registering and supervising payments.
Credit institutions, their branches and other clients of the Bank of Russia that have correspondent or other accounts with the divisions of the Bank of Russia settlement network may use electronic settlements. This helps accelerate money turnover and reduce the amount of funds in settlements.
The term "electronic payment document" (EPD) is used in effecting electronic settlements in the Bank of Russia settlement network. The EPD is a document that serves as a legal basis for conducting operations with the accounts of credit institutions (branches) and other clients of the Bank of Russia, opened with a Bank of Russia institution, bearing an electronic digital signature and having equal legal force, stipulated in an agreement with the Bank of Russia, with paper based payment documents signed by the authorised persons with their own hand and stamped.
At present the electronic payment documents presented for execution to a Bank of Russia institution must contain the requisites in accordance with which operations with accounts are conducted. Two kinds of EPD may be exchanged:
-full-format EPD containing all requisites of a payment document, including textual requisites;
-abndged-format EPD containing the requisites necessary for conducting operations with accounts in a Bank of Russia institution.
The transfer of funds using fall-format EPD does not require accompanying payment documents on paper, while the transfer of funds using abndged-format EPD must be accompanied by an exchange of paper based payment documents, filled out in accordance with the established procedure.
During 1999 the Bank of Russia plans to phase in a paperless technology in its settlement system, using full-format electronic payment documents only in the exchange of electronic documents between Bank of Russia institutions and between the Bank of Russia and credit institutions.
After January 1,1998, the Bank of Russia charges a fee for its settlement services. Some kinds of settlement operations are conducted by the Bank of Russia free of charge.
Interbank settlements effected through correspondent accounts opened by credit institutions with one another play a part in the general payment turnover.
The rules of settlement operations with correspondent accounts of credit institutions opened with other credit institutions are formulated in the Bank of Russia Provisions on Effecting Non-Cash Settlements by Credit Institutions in the Russian Federation, which came into effect in 1998.
The operations conducted with correspondent accounts of correspondent banks are divided into two types: operations to service clients and own interbank operations.
The development of correspondent relations depends on various factors, such as mutual payment flows, price and demand in the credit market, the possibility of participating in trading in the regional government securities markets and on currency exchanges and the risk levels.
Specifically, settlements in correspondent relations are effected with credit institutions in CIS and other countries.
Settlements through clearing institutions are one of the means of interbank settlements.
The development of clearing settlements depends on the financial condition of credit institutions and the state of the money markets. Eight settlement credit institutions have been granted permanent licence as clearing houses.
Clearing operations are based on a clearing model requiring the participating banks to make preliminary deposits in their accounts with the clearing institution.
Nearly 2,000 credit institutions and their branches and other corporate clients effect settlements through non-bank clearing institutions.
The Bank of Russia has a decisive role to play in elaborating the principles of organising clearing operations and monitoring compliance with these principles.
Intrabank settlements are gaining acceptance. They include settlements between a head office of a credit institution and its branches and between branches of a credit institution. The procedure for conducting settlement operations with inter-branch settlement accounts in Russia is established by the Bank of Russia Provisions on Conducting Non-Cash Settlements by Credit Institutions in the Russian Federation.
A mid-term strategy for the development of Russia's payments system was elaborated in 1996. It sets forth as the main objectives of the reform of the system further modernising settlements, upgrading banking technologies, introducing new instruments of payment, raising the standard of services provided to credit institutions and other organisations and creating conditions for liquidity management.
To raise the banking technology of implementing settlements onto a qualitatively new level, new methods are being developed, new rules and regulations are being enforced, new technologies are being introduced and new organisational principles are being established. Efforts are also being made to accelerate the introduction of electronic documents and build an advanced automated real-time system of settlements.
To this end, steps are being taken to determine the status and functions of individual subsystems for the implementation of settlements, enable credit institutions to manage their liquidity more accurately, develop and introduce formats of electronic documents and settlement documents on paper, stimulate the functioning of clearing institutions, improve conditions for the introduction of bank payment cards in order to reduce the amount of cash in circulation, and elaborateregulatory rules in these areas.
The Bank of Russia division responsible for ensuring methodologically and organisationally the efficient and uninterrupted functioning of the national payments system is the Methodology and Organisation of Settlements Department.
In accordance with its Statute, the Department ensures the implementation of the main tasks involved in developing and upgrading the methods of non-cash payments in the Russian Federation, elaborating a concept of development of the Bank of Russia payments system and organising supervision of the Bank of Russia settlement divisions and other settlement systems.