New payment systems

New payment systems

Yesterday the Central Bank of Iceland signed an agreement with Italian software provider SIA concerning the purchase and implementation of new software for interbank payments in Iceland. The new systems will supersede the current real-time gross settlement (RTGS) and netting systems, which have been in use since 2001.

The RTGS system is a payment system that handles the settlement of all payment instructions between participants (i.e., financial institutions) in amounts of 10 million Icelandic krónur or more. The retail netting system is a payment and settlement system for monetary transactions involving amounts less than 10 m.kr. Total turnover in Icelandic interbank payment intermediation systems amounted to about 21,000 billion krónur in 2016.

Preparations for pre-selection of a software provider took place in the latter half of 2015 and concluded with publication of the pre-selection process throughout the European Economic Area (EEA) in December of that year. Five companies submitted pre-selection documents. After examining and evaluating them, the Central Bank determined that two of them satisfied its requirements, and these two were invited to participate in the tender.

The tender was then held for the project, based on a detailed analysis of the criteria that the new systems and the software provider must meet, together with the requirements for interbank payment intermediation in Iceland. The deadline for submittal of tenders was on 9 June 2016. After careful consideration, it was decided to accept the bid placed by Italian software provider SIA, which specialises in technical infrastructure solutions for financial institutions, central banks, and public entities worldwide. Perago, an SIA subsidiary that has been a leader in development of payment infrastructure for central banks, will implement the solution for the Central Bank of Iceland. SIA/Perago’s RTGS systems are used widely in the Nordic region. In view of the close collaboration between the Central Bank of Iceland and other central banks in the Nordic countries, it is clear that certain synergies will be achieved in the future, as regards the potential adaptation of the SIA/Perago systems to accord with market and technological advances. The software must at all times fulfil internationally recognised best practice requirements, as such requirements are made to the structure and operation of systemically important financial infrastructure such as the systems in question.

It is assumed that the new software will be brought fully into use in 2018.

Further information can be obtained from Guðmundur Kr. Tómasson and Páll Kolka Ísberg at tel: +354 569 9600.

No. 4/2017
23 February 2017