Electronic payment intermediation promotes transparency and efficiency. The proportion of payment intermediation carried out electronically is very high in Iceland. It is based on the use of payment systems, many of which are interconnected both directly and indirectly. Monetary transactions from various payment systems (or financial market infrastructure elements) are routed in differing ways through the payment and settlement systems that collectively handle the intermediation, settlement, and registration of the transactions. Monetary transactions accumulate in smaller systems and are transferred to larger systems, and many financial institutions offer payment intermediation and provide related financial services. Because the largest systems are based on the central software of the Icelandic Banks’ Data Centre (RB), Iceland's payment intermediation infrastructure is highly centralised and linked in various ways to RB’s activities. This long-established arrangement is founded on decades of cooperation between commercial banks and savings banks. Its advantages include enhanced coordination, oversight, and operating efficiency. However, the arrangement may entail an operating risk of contagion between systems if a problem arises.
The most important payment and settlement systems are the RTGS system, the retail netting system, and the securities settlement system. The Central Bank of Iceland carries out the day-to-day operation of the RTGS system, while Greiðsluveitan ehf. handles the netting system and the Icelandic Securities Depository hf. operates the securities settlement system. The technical operation of these systems is carried out at RB. The Central Bank of Iceland oversees payment intermediation and the above-specified payment and settlement systems because of the importance of these fundamental elements of the economy, both for the economy as a whole and for financial stability.
Systems that transmit large sums of money and valuables between financial institutions are usually considered most significant and therefore systemically important. If the payer and payee are not customers of the same financial institution, payment is generally made between their respective institutions in accordance with the payment instructions. All payments in Icelandic krónur that take place between financial institutions/participants in the RTGS and netting systems are finally settled through their accounts with the Central Bank.
Real-Time Gross Settlement (RTGS) System
Retail netting system
Securities settlement system