Bahamas Central Bank Launches Electronic Settlement System

by Amanda Banks, Tax-News.com, London

07 June 2004

The Central Bank of the Bahamas last week announced the official launch of the county’s new interbank electronic settlement system, designed to modernise the jurisdiction’s payment system and reduce clearing times.

According to Central Bank Governor Julian Francis, the system was implemented at a cost of $2 million to the bank and will facilitate the transfer of payments in excess of $10,000 between banks.

The Nassau Guardian reported that at a recent demonstration of the new facility at the Central Bank, Minister of Finance, Senator James Smith, explained that the Bahamas Interbank Settlement System (BIBS) is a real time gross settlement system owned and operated by the Central Bank, the use of which has initially been restricted to the seven current clearing banks, all of which participated in its development.

Senator Smith further explained that the launch of BIBS represents the completion of the first phase of the larger Payment System Modernisation Initiative (PMSI) which commenced in 1999.

Its objectives are to bring the country’s payment system in line with international practices, mitigate risks, increase efficiency and encourage the development and growth of new financial products.

"Consistent with international best practices, funds transferred through BISS are immediate, final and irrevocable, bringing the system in line with generally accepted principles for safe and efficient national payment systems," observed Senator Smith.

He added that work has begun on phase 2 of the PMSI programme which is working towards the creation of an Automated Clearing House system, scheduled to come online in the first quarter of 2005.

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