Norges Bank's roles in the payment system
Norges Bank is tasked with promoting financial stability and an efficient and secure payment system. This mandate is laid down in the Central Bank Act and the Payment Systems Act.
Norges Bank fulfils this mandate through several roles:
Operator
As operator, Norges Bank provides efficient and secure solutions for the settlement of interbank payments and for the supply of banknotes and coins.
Norges Bank is the bankers’ bank and the ultimate settlement bank for interbank payments in Norway. Banks holding an account at Norges Bank can draw on credit and hold deposits use these accounts to settle payments with other account holders. As the issuer of money, Norges Bank ensures that deposits held at the Bank do not pose a credit or liquidity risk to banks. The interest rate on banks’ deposits (also referred to as central bank reserves) provides a basis for interest rate formation across the Norwegian economy.
About Norges Bank's settlement system
Norges Bank is responsible for issuing banknotes and coins in Norway. This includes determining their denominations and design. The Bank is also responsible for ensuring that society has access to and the necessary confidence in cash as a means of payment.
Licensing and supervisory authority
As a supervisory authority, Norges Bank sets requirements for licensed interbank systems.
Norges Bank is the licensing and supervisory authority for the part of the payment system known as interbank systems, which cover systems for clearing and settlement between credit institutions. While the Payment Systems Act establishes general requirements for such systems, Norges Bank may set more detailed requirements based on risk assessments of individual systems. Licensed systems are required to report to Norges Bank on turnover, exposures, incidents, contingency exercises and other relevant matters.
If a licensed interbank system does not comply with the Payment Systems Act or the conditions of its licence, Norges Bank will require corrective action. The objective is to ensure that interbank systems are organised in a manner that safeguards financial stability. Norges Bank may grant exemptions from licensing requirements for systems deemed to be of limited importance to financial stability.
Norges Bank supervises two licensed interbank systems:
- Norwegian Interbank Clearing System (NICS)
- DNB’s settlement banking system
Overseer
As overseer, Norges Bank assesses the Norwegian payment system and other financial infrastructure against principles and standards for best practice. The Bank monitors developments and recommends measures to enhance efficiency, security and contingency arrangements.
A key reference framework for Norges Bank’s supervisory and overseeing activities is the Principles for Financial Market Infrastructures (PFMI) drawn up by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO). The objective of these principles is to ensure a robust financial infrastructure that promotes financial stability.
Norges Bank’s own settlement system (NBO) is not subject to the Payment Systems Act. However, Norges Bank has assumed that NBO is to be overseen according to the same standards as licensed interbank systems. Norges Bank’s internal oversight function is organisationally separate from the operational management of NBO.
Several of the systems supervised or overseen by Norges Bank are also followed up by other authorities:
The oversight of international systems, which is important for Norway’s financial infrastructure, is conducted through participation in international cooperative arrangements led by other central banks. This includes the foreign exchange settlement system CLS (Federal Reserve) and central counterparties, such as LCH (Bank of England) and Cboe Clear Europe (De Nederlandsche Bank).
Securities settlement systems and central securities depositories operated by Euronext Securities Oslo are licensed and supervised by Finanstilsynet. At the same time, the Central Securities Depository Regulation (CSDR) assigns certain responsibilities to Norges Bank that complement the Bank’s oversight of Euronext Securities Oslo pursuant to the Central Bank Act. Finanstilsynet acts as the competent authority under the CSDR, while Norges Bank is a relevant authority. Norges Bank and Finanstilsynet collaborates closely in this area.
Finanstilsynet also supervises customer-facing payment systems, such as cash services, card schemes and payment applications. The Central Bank Act clarifies that Norges Bank is responsible for monitoring the payment system as a whole, including these customer-facing payment systems. Norges Bank and Finanstilsynet also collaborate closely in this area.
Norway's financial system provides a more detailed description of the systems supervised or overseen by Norges Bank, as well as key events, findings and developments.
Driving force
Norges Bank’s role as a driving force in financial infrastructure is rooted in its statutory responsibility to oversee the payment system and other financial infrastructure, and to promote an efficient and secure payment system. As part of this role, Norges Bank can issue recommendations and encourage both public authorities and private sector participants to implement measures that make the payment system and related infrastructure more secure and efficient.
Through publications such as the annual Financial Infrastructure report, Norges Bank highlights measures that can help ensure that the payment system remains efficient and secure in a period of rapid technological change and a demanding threat landscape.
Norges Bank’s role of driving force, includes responsibility for contributing to effective contingency and crisis management arrangements, both in the Bank’s capacity as an operator and as an overseer. In addition to providing advice and recommendations, Norges Bank plays a central role in facilitating TIBER testing in critical systems and in promoting knowledge and experience-sharing across the sector.
Norges Bank is also a driving force in promoting collaboration, dialogue and coordination among financial sector participants through meetings, seminars and established forums such as the Payments Forum, as well as through participation in the Financial Infrastructure Emergency Preparedness Committee.
Report Financial infrastructure
The annual Financial Infrastructure Report covers developments, vulnerabilities and risks in the financial infrastructure.
Report Norway's financial system
The report Norway's Financial System provides a comprehensive overview of the financial system in Norway, its tasks and the performance of these tasks.