Nationalise the Clearance System

aftermn

Now that we (more or less) own the banks, should we insist on the payments clearing system being seperated out into a new company which would be held in state ownership after the re-privatisation of the banks.

The payments clearing system is, in many ways, like the transmition system in the ESB (ESB Networks). There are many calls for privatisation of the ESB but most agree that the transmission system should be held in state ownership, or at least privatised as a seperate entity.

Any views on this?

jimmycrackcorm

My view is why? What's wrong with it as it is at present?

ei.sdraob

One potential problem I see with state getting their hands on this:

* being connected to revenue system
* transaction taxes being introduce :eek:

DiscoStu

jimmycrackcorm wrote: »

My view is why? What's wrong with it as it is at present?

Might come in handy when the state is forced to drop the banks as debt servicing crushes the economy. With it out of the control of the now dead banks at least some of the their previous monetary transaction functions still will still be intact allowing for an orderly transition of last remnants of the economy over to the king charles notched stick based currency. Or shotgun shells, depends on quickly the post apocalyptic hellscape develops.

Sticky_Fingers

While there is ample opportunity of governmental abuse (it was just resting in my account tax) by stripping out the payments clearing system and setting it up as a separate entity perhaps it would be a prudent move considering our creaking banking sector.
As stated previously if the whole system does come crashing down we will need to salvage some part of our financial infrastructure to keep us ticking over.

On a related topic, does anyone know if the DoF have any sort of Plan B if/when our banks go into meltdown? I would hope that they have a team working on some sort of strategy or system that will (hopefully) tide us over until we can pick up the pieces and begin to rebuild.

GSF

Creating a public sector body that can potentially hold the rest of the country to ransom. Bad idea. :rolleyes:

ei.sdraob

Sticky_Fingers wrote: »

While there is ample opportunity of governmental abuse (it was just resting in my account tax) by stripping out the payments clearing system and setting it up as a separate entity perhaps it would be a prudent move considering our creaking banking sector.
As stated previously if the whole system does come crashing down we will need to salvage some part of our financial infrastructure to keep us ticking over.

On a related topic, does anyone know if the DoF have any sort of Plan B if/when our banks go into meltdown? I would hope that they have a team working on some sort of strategy or system that will (hopefully) tide us over until we can pick up the pieces and begin to rebuild.

Hmm add 3rd reason to my list

* impose capital controls and freeze peoples accounts :eek:

later12

Nothing at all wrong with an idea like the OP has presented, in fact it has been floated quite a bit given that Ireland has no formal combined clearing structure in place for its financial institutions.

It could be a possible revenue raiser, although not a particularly awesome one.

Sticky_Fingers

ei.sdraob wrote: »

Hmm add 3rd reason to my list

* impose capital controls and freeze peoples accounts :eek:

Didn't think of that:(

DiscoStu

GSF wrote: »

Creating a public sector body that can potentially hold the rest of the country to ransom. Bad idea. :rolleyes:

As opposed to the privately controlled system that has already held the state and its citizens to ransom and been paid handsomely for the service?

Facilities essential to the function of the country should be publicly held. Let private enterprise pay to use the systems and you have a reasonable compromise.

jimmycrackcorm

DiscoStu wrote: »

As opposed to the privately controlled system that has already held the state and its citizens to ransom and been paid handsomely for the service?

Facilities essential to the function of the country should be publicly held. Let private enterprise pay to use the systems and you have a reasonable compromise.

How about we have the passport staff do the job instead? Not being able to get out of the country is small measure compared to not getting your money.....

DiscoStu

jimmycrackcorm wrote: »

How about we have the passport staff do the job instead? Not being able to get out of the country is small measure compared to not getting your money.....

Easy there Bosco. A single department downing tools out of the whole gamut of public sector services does not a non functional public service make.

In spite of the cuts and constant negativity most frontline services are still in operation. It would be idiotic to claim its perfect but then so would rubbishing an idea that would to a certain extent allow for a semi functional monetary system to operate in case of a catastrophic collapse of the banking sector over a strawman argument that passport office workers failing to deliver your passport is indicative of the entire body of publicly employed staff.

GSF

DiscoStu wrote: »

As opposed to the privately controlled system that has already held the state and its citizens to ransom and been paid handsomely for the service?

Facilities essential to the function of the country should be publicly held. Let private enterprise pay to use the systems and you have a reasonable compromise.

The clearing system has worked well - give me instances of where a public body would work better?

Your idea of creating a single body for bank clearing would make it very vulnerable to srtike action paralyising the entire country's commercial activity - just like the passport office strikes hit peoples ability to travel.

DiscoStu

GSF wrote: »

The clearing system has worked well - give me instances of where a public body would work better?

Your idea of creating a single body for bank clearing would make it very vulnerable to srtike action paralyising the entire country's commercial activity - just like the passport office strikes hit peoples ability to travel.

But we already have a single point of failure in the system and ei.sdraob's point are already possible. The threat of it failing was used as a sword of Damocles dangling over the head of the state as a justification for the bank bailout. Remember the scare tactics that wages wont be paid, social welfare payment not reaching the needy and kittens freezing as their owners gas is cut off because the bills couldn't be paid.
In addition what leads you to the conclusion that private enterprise is more capable of a satisfying a public service mandate? If the last few year have registered with you it should become apparent that the banking system in particular is singularly incapable of serving anything other than their own interests. While the public good and banking sector did overlap for a while don't take it as evidence that they will always coincide, as demonstrated by the debt servitude we have been sold into.

As essential a system as it can't be trusted to a sector in such a percarious state, which operates in such a weak regulatory framework and demonstrably works against the public good. It needs to be seperated and operated independently of the banks so to ensure it still functions if the worst does happen.

GSF

DiscoStu wrote: »

But we already have a single point of failure in the system and ei.sdraob's point are already possible. The threat of it failing was used as a sword of Damocles dangling over the head of the state as a justification for the bank bailout. Remember the scare tactics that wages wont be paid, social welfare payment not reaching the needy and kittens freezing as their owners gas is cut off because the bills couldn't be paid.
In addition what leads you to the conclusion that private enterprise is more capable of a satisfying a public service mandate? If the last few year have registered with you it should become apparent that the banking system in particular is singularly incapable of serving anything other than their own interests. While the public good and banking sector did overlap for a while don't take it as evidence that they will always coincide, as demonstrated by the debt servitude we have been sold into.

As essential a system as it can't be trusted to a sector in such a percarious state, which operates in such a weak regulatory framework and demonstrably works against the public good. It needs to be seperated and operated independently of the banks so to ensure it still functions if the worst does happen.

LOL the threat of non honouring of payments was nothing to do with the functioning of the clearing system. It was the fact that the banks that were supposed to honour those payments had no money that was the "sword of Damocles".

If you nationise the clearing sytem, that does nothing to prevent that happening in future. Its like nationalising air traffic control and hoping that will prevent airplanes crashing because of poor maintenance.

OhNoYouDidn't

You mean TARGET?

Which is currently owned by the ECB and operated in Ireland by the Central Bank?

Or its soon to be replaced with alternative, SEPA?

Which is owned by the ECB and will operated by the Central Bank?

I really wish people would do some basic research before opening these threads,,,

later12

OhNoYouDidn't wrote: »

You mean TARGET?

Which is currently owned by the ECB and operated in Ireland by the Central Bank?

You appear to be confused, I'm not sure why you are trying to undermine the OP's post. His suggestion is decidedly logical and reasonable to my mind. TARGET is not a national clearing house, it was never intended to be one, and it only partially relates to all of the clearing processes that occur on bilateral bases between banking and financial institutions in this country. As far as I can see, the OP is suggesting something more comprehensive than both TARGET and SEPA although I'm sure that he or she, presumably knowing something about clearing houses, can fight his or her own corner. I'm not quite sure, based on your condemnation, that you can claim any such knowledge.

user1842

later10 wrote: »

You appear to be confused, I'm not sure why you are trying to undermine the OP's post. His suggestion is decidedly logical and reasonable to my mind. TARGET is not a national clearing house, it was never intended to be one, and it only partially relates to all of the clearing processes that occur on bilateral bases between banking and financial institutions in this country. As far as I can see, the OP is suggesting something more comprehensive than both TARGET and SEPA although I'm sure that he or she, presumably knowing something about clearing houses, can fight his or her own corner. I'm not quite sure, based on your condemnation, that you can claim any such knowledge.

Can you please describe what clearing network you are talking about?

Under current EU legislation there will be a PAN European clearing network. This is already in the making, SEPA Credit transfers are already live and SEPA Direct Debits will follow very soon, SEPA cards is on it way. This is meant to replace local clearing networks.

I assume you are talking about the various methods of clearing Irish Banks use to do business with other Irish banks. I really believe SEPA DD's will do most of this from a basic customer point of view

bonkey

aftermn wrote: »

Now that we (more or less) own the banks, should we insist on the payments clearing system being seperated out into a new company which would be held in state ownership after the re-privatisation of the banks.

Payments Clearing is already seperated out, though, isn't it?

The various companies under the IPSO umbrella comprise the various clearing "houses".

I'm not sure how transferring ownership of this to the state would be of benefit.

later12

Can you please describe what clearing network you are talking about?

I'm not, within Ireland itself there is no single clearing network, there are a variety of networks and associations.

dmclean1842 wrote: »

I assume you are talking about the various methods of clearing Irish Banks use to do business with other Irish banks.

Yes

I really believe SEPA DD's will do most of this from a basic customer point of view

I must admit that while it is fantastic in principle, I don't fully share your enthusiasm for the potential success of SEPA not just within Ireland but in Europe itself, and I think most companies and financial institutions who are interested in a scheme like SEPA would have similar reservations. Nevertheless I hope I am incorrect, and while I do take your point on SEPA, I was primarily responding to the issue of TARGET.

user1842

later10 wrote: »

I must admit that while it is fantastic in principle, I don't fully share your enthusiasm for the potential success of SEPA not just within Ireland but in Europe itself, and I think most companies and financial institutions who are interested in a scheme like SEPA would have similar reservations. Nevertheless I hope I am incorrect, and while I do take your point on SEPA, I was primarily responding to the issue of TARGET.

Hopefully SEPA will catch on. I know AIB will force all their direct debit customers to use SEPA DD's by 2014 I think. Their system is already live so you never know. Also I think AIB will act as an agent for smaller banks to access their network.

SEPA is a great idea and already I can send a payment to anywhere in the EEA for free with gets there the next day

aftermn

Thanks to all for the information and comments. I am not a banker and cannot claim expertise in the subject. The question arose rather in a political context, i.e. the banks being too big to fail, thus requiring rescue by the state. Would not the existence of a separated clearance system, whether in public ownership or as a separate listed entity, reduce the 'systemic importance' of some of these banks thus reducing the political impact of their failure?
If there is a move in this direction, well touche and onward. However a quick Google on Sepa leaves me wondering.

"SEPA is a project managed by the European Payments Council on behalf of European banks. In Ireland, SEPA is managed by IPSO on behalf of Irish banks."


"SEPA-compliance requires full integration into a PEACH - a Pan-European Automated Clearing House. For smaller countries, including Ireland, this appears to mean shifting the clearing operation to one of the PEACH operators. But it is by no means clear that other options are excluded.
Note that Ireland does not have an Automated Clearing House (ACH). Instead, Ireland has a series of bilateral links between the major banks. The Irish national clearing operator is Irish Retail Electronic Clearing Company Ltd, a company within the IPSO umbrella."

Who owns IPSO, is it a listed company or owned by it's member banks. And on IPSO;

"IPSO’s primary role is discharged at a strategic level. IPSO does not own or operate, the physical infrastructure, but IPSO does have a critical role to play in the development of that common infrastructure, which requires the participation and cooperation of competitor payment institutions. This co-operation is essential in order to deliver a robust payments system to Irish consumers and businesses, which is vital to the smooth running of the economy."


From a political perspective, is this level of separation sufficient to reduce the systemic importance of the banks. It appears from the above to be merely a set of guidelines placed over the existing infrastructure.

user1842

aftermn wrote: »

"SEPA-compliance requires full integration into a PEACH - a Pan-European Automated Clearing House. For smaller countries, including Ireland, this appears to mean shifting the clearing operation to one of the PEACH operators. But it is by no means clear that other options are excluded.
Note that Ireland does not have an Automated Clearing House (ACH). Instead, Ireland has a series of bilateral links between the major banks. The Irish national clearing operator is Irish Retail Electronic Clearing Company Ltd, a company within the IPSO umbrella."

Ireland connects to EBA (a PEACH operator). Never heard of IPSO managing this connection so thanks for the info. Great informational post.