A Study On The Risk Of China's Payment System

Payment system is an important component part of a country's economy, and the basis of financial operations. The development of the payment system can effectively promote the economic and financial and social development.Bank for International Settlements thinks payment system may arise in liquidity risks, credit risks, legal risks, operational risks and systemic risks. Those risks have extensive ties, a expanding risk may lead to another risks, Various risks have obvious connections in the conduction and direction, the liquidity risk and credit risk have the critical and core status. Liquidity risk and credit risk have the critical and core status. Liquidity risk of a payment system running interference, results credit risk, laws, regulations, or imperfections, as well as the absence of application software design flaws, machine hardware and network communication failures, operational errors and the risk of moral hazard, and so on, credit risk leads to widespread systemic risks. Risk transferring process is as follows: (1) If the funds due to liquidity problems deferred payments, it will force the receivables to make up for the shortfall in funds to seek other financing channels, and to bear the cost of financing; (2) If this funding gap can not make up for the time, it will force the receivables to pay its creditors postponed; (3) With the increasing arrears, the entire payment systems will threat to the normal operation, which eventually led to system risk. New York clearing house inter-bank payment system (CHIPS) data shows, if the participation of a large rolling bank is unable to pay, it will lead nearly half of the other participants failure to settlement, as a chain reaction, this inability to pay bank trading institutions will be affected, liquidity risk and credit risk in the system are very easy to spread in the domino effect, thus it will result systemic risks. Thus, regardless of the link problems in the chain of payment risks, it will impact payment system on the smooth and efficient operation, and have the impact of the effective implementation of monetary policy and financial institutions to provide funds for liquidation services, at last it will impact on the public's confidence in the entire financial system and pose a huge threat to financial stability.China's government attaches great importance to the building of the payment, which will be included in the important programmatic document about China's economic development. Third Plenum of the 16th National Party Congress passed " the decision about CPC Central Committee on improving the socialist market economic system" clearly put forward to establish and improve a unified, efficient and secure payment and settlement system.PRC 11th Five-Year Plan for national economic and social development planning framework proposed to improve the payment and settlement efficiency and improve financial market registration, hosting, trading, clearing system. Under the correct leadership of the State Council, the People's Bank of China implements the "Three Represents" important thought, comprehensively implements the scientific concept of development, and advances with the times, effective implementation of the central bank as a payment system for the building of the organizers, and promotes the supervision duties, so as to establish a secure and efficient payment system as the goal, and vigorously promotes China's reform and development payment system, payment system for the building of China made significant progress on promoting the economic and financial development obviously.Since reform and opening up, China's economy has grown rapidly, our economic power and comprehensive national strength have been improved, the rising international influence and improving people's life demand the payment system for the development. Especially, China has entered the comprehensive construction of a well-off society and speed up building a socialist harmonious society to a new stage, facing the construction of a new payment system for the environment, it is necessary to further accelerate the development of payment system. at present China payment system still need to improve in some aspects, the imbalance in regional economic development results in the different payment services, and there is a greater gap between the different banking financial institutions ,Especially for small and medium-sized financial institutions need to strengthen the capacity of non-cash payment tool and universal usage; thus settlement regulations and systems need improvement; payment risk prevention and control mechanisms need to further improve.Therefore, it is necessary to make a comprehensive and systematic study of the payment system risk, the paper aimed at comprehensive and in-depth analysis of payment system risk, in order to effectively prevent and resolve payment system risks, and facilitate the payment systems security and efficient operation and explore maintenance of financial stability.The Paper altogether divides eight chapters.The first chapter introduces the background and significance of issues related to research situation, and discusses the object of study, research, innovation and inadequacies of the state.The second chapter briefly introduces payment system related concepts. Payment system will be defined as realization of the money transfer system and the organic composition of the technical arrangements, thus the payment system is discussed four levels, including the payment system, payment instruments, and payment services organizations, and payment system of supervision and management. On the basis this chapter analyses the important roles of the payment system for economic development and financial stability, at the same time it will elaborate the national payment system and the important concept of core principles.The third chapter elaborates the risks in the payment system, including credit risk, liquidity risk and systemic risk. In defining the general concept of credit risk, the credit risk in the payment system is defined as the parties should not be expected liquidate their debt in any subsequent time completely within the scope of the consequences risk, further analyses techniques revolutionary change for credit risk measurement. In defining the liquidity risk and systematic risk it analyses the specific concept about risk mechanism, types and so on.The fourth chapter elaborates payment tools of payment risks. Firstly it introduces the risk of payment instruments from the subjective and objective aspects, subjective risk is mainly caused by man-made tools led to the emergence of various problems, and objective risk was mainly due to payment instrument in the material, design, research and development etc. there are all kinds of defects making the risk of the emergence of various problems. Subsequently, the chapter analyses the risk of payment instruments caused by the moral hazard, and specific analyses of the objective factors caused by the payment risk.The fifth chapter analyses the payment risks in payment services. the main risk for the payment of service organizations is operational risk, this chapter discusses on the concept of operations risk, risk factors, risk losses, and risk characteristics. Thus it analyses specific forms and measurement methods in service organizations operating risks, including new agreements provide the measurement methods and the international banking industry commonly used measurement methods.The sixth chapter analyses payment risks for the system. the main risk is discussed for the legal risks in the payment system, the legal risk defines that unreasonable legal framework or legal uncertainty on the risks posed by the foundation lead to deterioration in credit risk or liquidity risk, it will discuss the legal connotations of payment system risk with a further example of our country. Further it analyses the concrete expression of the risk in the legal system, elaborates the links between the relevant laws and regulations, then analyses the application of the law and the protection of two aspects.The seventh chapter analyses payment system risk prevention of international experience with euro area nation for example, Real-time system introduced in full settlement system (RTGS) and net settlement system (DNS), on the basis it analyses the full pan-European automated real-time clearing rapid transfer system (TARGET) , the clearing EURO system of the European Banking Association and risk prevention measures to guard against the euro countries in the payment system, explaining the risk of the methods and experience ,which is paid to an our country learn from.The eighth chapter with above research, views our country development of history in the payment system, analyses current situation and prospects development, further analyses risk prevention measures in the payment system, including payment systems and risk prevention measures in the financial institutions, thus proposes recommendations about risk prevention policy to strengthen China's payment system.