The Study On Legal Issues Of Cross-Border Payment Systems

Payment systems are important part of the monetary system under the market economy.They are important financial market infrastructures to support the development of national economy and finance.Payment systems serve as the blood circulation system in the financial system,which makes them the main channel of risk transmission.Therefore,it is closely related to national economic development and financial stability.As cross-border payment systems involves cross-border factors and faces more risks,more attention shall be paid to the improvement of operation and supervision rules and regulations.In addition,the cross-border payment systems is closely related to the implementation of national strategies,international political pattern and international financial governance.The dominant position of the US dollar in international currency and the monopoly advantage of the US dollar's cross-border payment system,have become an important basis for the US to impose unilateral financial sanctions against other sovereign countries.By contrast,China is building and improving RMB cross-border payment system CIPS,which is the China?s program and contribution for world development.It will not only enable international community to fight against financial power,improve the pattern of international governance,but also help China promote the internationalization of RMB and the Belt & Road construction,and implement the concept of Community of Shared Future for Mankind.The object of study of the dissertation is the cross-border payment systems that provide large value cross-border payment services.According to the standard of clients and payment amount,payment systems can be divided into large value payment systems and small value payment systems.Among them,cross-border payment systems,which provide large value payment services,are the key role to international economic and trade exchanges,and also one of the high-risk areas where systemic financial risks may arise.Therefore,they are classified into the category of system importance payment systems.The aim of the study on cross-border payment systems,is to clarify the specific rules and regulations of the payment systems and put forward suggestions to improve them,so as to reduce the risk of payment systems operation and promote the safe and stable operation of payment systems.The dissertation adopts normative analysis,comparative analysis,interdisciplinary analysis and other research methods,follows the research vein of international financial law,and starts the study with international standards such as the Financial Market Infrastructure Principles,to analyze rules and regulations of cross-border payment systems from the aspects of legal basis,governing structure and risk management,in order to providing suggestions on further problem solving and mechanism improvement to RMB cross-border payment system.Excpet for the introduction and conclusion,the contents of the dissertation could be divided into the following chapters.The first chapter is a general theory,which discusses the necessary prerequisites for the research of cross-border payment systems.Firstly,the meaning and definition of payment,cross-border payment,payment systems and cross-border payment systems are clarified.The legal relation of cross-border payment and the subjects are systematically explicated.Secondly,it defines the meaning of cross-border payment and cross-border payment systems,the characteristics of cross-border payment systems.Section two summarizes the origin and development of global cross-border payment systems.Firstly,it analyzes the origins of cross-border payment concerning international currency,such as dollar,euro and pound,and the present situation of corresponding cross-border payment systems.Then,it introduces the development of CIPS and RMB cross-border payments,mainly including the RMB cross-border payment mode and its challenges before the launch of CIPS,as well as the vital functions of CIPS.The third section is about the analysis on legal issues of cross-border payment system.From the perspective of international financial law,this topic can be divided into three small issues: international standard research on cross-border payment system;Study on specific rules and systems of cross-border payment systems;suggestions on the improvement of CIPS.The following part will analyze these issues.The second chapter introduces theoretical basis the construction,operation and the supervision system of cross-border payment systems.It analyses the payment economics theory,the systemically important financial institution(SIFIs)theory,the functional supervision theory and the institutional supervision theory respectively.Among them,the contents of payment economics theory contains the development course of payment economics theory,the function and development trend of large value payment system from the perspective of payment economics,and the balance of financial security and efficiency value from the perspective of payment economics theory.The theory of SIFIs mainly introduces the definition and identification criteria of SIFIs,as well as the financial risk countermeasures from the perspective of SIFIs.Additionally,combining the actual standards of the United States and the European Union,it practically analyses the identification criteria of the systemic importance of cross-border payment systems.Finally,it analyses the common theories of functional supervision and institutional supervision in financial supervision,and makes a comparative analysis between two theories.The third chapter discusses the international standards related to the management,operation and supervision of cross-border payment systems.The first section mainly analyses the background of international standards promulgation.Because of the challenges faced by financial market infrastructure(FMIs)supervision due to new situations,new cooperations on international mechanisms and international rules arise.These cooperations also are the background of the issuance of corresponding international standards.Section two analyses the Financial Market Infrastructure Principles(PFMI)regulations related to cross-border payment systems.The core principles concerning payment systems of PFMI,is inherited from the Core Principles of Systematic Importance Payment System(CPSIPS).The main contents of the two international standards can be summarized in the following aspects: legal basis,governance structure and risk management.Section three discusses the legal nature of international standards for cross-border payment systems.The disseration makes a comparative analysis of the characteristics of customary international law and soft international law.Then,combining the specific content and characteristics of the international standards mentioned above,the legal nature of international standards is considered into soft international financial law.The fourth chapter discusses the legal basis of American and European cross-border payment systems.The first section summarizes the two legislative model of the cross-border payment systems legal basis related to the United States and the European Union.The legislative model of United States is a combination of federal laws and state laws,while the legislative model of European Union is a combination of EU-level directives and regulations,as well as domestic laws of member states.The second section makes a comparative analysis of the specific laws and regulations concerning US dollar cross-border payment system CHIPS,and Euro cross-border payment systems TARGET2 and EURO1,including rules of law application,final settlement rules,recovery and disposal rules,etc.After discussing the specific rules and regulations about the above-mentioned cross-border payment systems,the thrid section focus on the international legal basis of the legal relation of large value cross-border payment,namely the UNCITRAL Model Law on International Credit Transfers.This section discusses the Model Law,mainly including the scope of application,legal effect and main contents,etc.,and makes a comparative analysis with the United States Uniform Commercial Code and other related rules.The fifth chapter discusses the content of the governance structure of the cross-border payment system.The first section discusses the organizational forms of the cross-border payment systems? operators in the United States and Europe,mainly including the organizational structure,management and decision-making mechanisms,etc.Among them,CHIPS is a limited liability company and EURO1 is in the form of company limited by shares.Both of them are owned and operated by private institutions and share similar multi-level decision-making mechanisms.TARGET2 is owned and operated by the euro system,which is a public entity at the EU level.It has a multi-level decision-making mechanism different from the corresponding mechanism of the corporate form.The second section mainly discusses the specific standards for participants? access to cross-border payment systems in the United States and Europe,including initial access standards,management of participant on diffirent levels,and continuous review of participant risk situations.The third section discusses their public interest balance,information disclosure and internal audit systems.Among them,the public interest balance part compares and analyzes the public interest embodiment and consideration of the three payment systems.Information disclosure mainly analyzes unique conflict of interest disclosure and avoidance system of CHIPS.Chapter six discusses the risk management of cross-border payment systems.Payment systems risk contains settlement risk,operation risk and systemic risk.The first section discusses settlement risk management,including the definition and harmfulness of credit risk and liquidity risk,the general principles of settlement risk management,and the practice of settlement risk management in international cross-border payment system.Section two discusses operational risk management,including the meaning and performance of legal risk,operational risk and commercial risk,the general principles of operational risk management,and the operational risk management practice of international cross-border payment system.Section three,systemic risk management,mainly includes three parts: the definition and causes of systemic risk;the general principles of conduction and management of systemic risk;and the regulatory practices of the United States,the European Union and the United Kingdom on systemic risk management.The corresponding international experience of systemic risk management,is worthy of our reference.Chapter seven discusses the improvement of RMB cross-border payment system.Based on the international experience of main cross-border payment systems,this chapter proposes corresponding suggestions on the improvement of CIPS system from the aspects of legal basis,governance structure and risk management.The first section,the legal basis of CIPS,focuses on the analysis of the CIPS legal selection rules,final settlement,recovery and disposal rules,as well as the insufficiency of the regulatory rules of the payment system,and puts forward corresponding Suggestions for improvement.The second section analyzes the improvement of CIPS governance structure,from the aspects of the organizational form of CIPS operators and the decision-making mechanism,the access mechanism of participants and the fair and open system,etc.,to analyze the status quo,shortcomings and improvements of CIPS governance structure and put forward improvement suggestions.The third section analyzes the deficiency and improvement of CIPS risk management system,including settlement risk management,operation risk management and systematic risk management.