Deputy Governor Pentti Hakkarainen: Payment simulator – worth using, testing and developing further, Helsinki, 28 August 2014
Speeches and interviews
Speech
Thursday 28 August 2014, 3:00 PM
12th Payment and Settlement System Simulation Seminar and Workshop
Helsinki on 28 August 2014
Key talking point (check against delivery)
I welcome you all to simulator seminar. When I am looking the list of participants, I really appreciate your attendance. There is a good geographical coverage – 25 nationalities from five different continents. Based on the survey before the seminar, you are the most interested in indicators on payment system data and stress testing of the payment systems. Also this year we are focusing on both these themes.
In my speech I want to emphasize three points:
The annual simulator seminar has been an important meeting place and supports work around the BoF-PSS2 simulator. Visitors bring new ideas to share with the other participants and visitors receive takeaways to apply in their own work at home. In this year seminar, the simulator has been utilized in five presentations. Here I will name a couple of them. “Not all payments are created equal” is the analysis on the use of reservations in TARGET2 payment system and its effects on efficiency and risks and on different payment types. “A dynamic approach to intraday liquidity needs” is the work where the BoF-PSS2 – simulator is applied to study the importance of intraday liquidity risk management as a mechanism for mitigating systemic risk. This topic has also been recently issued by the Basel Committee on Banking Supervision (BCBS).
What has been achieved during the last year? T2 Simulator has become a highly appreciated tool for conducting analysis of overseers and operators of TARGET2 system. Recently a review of this work was published in Target Newsletter – serie of ECB. The T2 Simulator has helped the Eurosystem to identify the most critical participants in TARGET2 and to verify whether the tools and procedures currently available are appropriate or could be improved further. The new general version (v410) of the BoF-PSS2 simulator was released in June. It includes many improvements that aim to more consistent and reliable simulations. All current and new users of the BoF-PSS2 simulator are encouraged to contact the BoF-PSS2 simulator team (www.bof.fi/sc/bof-pss/) and download the latest version. We all know how important is that we can rely on the outcome of our quantitative analysis.
Then looking in the future. Simulator has proven its usefulness as an assistant of quantitative oversight work. I hope that this work inspires the audience and the simulator users to contribute the further development of the simulator. It is very good that you, as users and analyzers, put the simulator in a “market test” which guarantees further improvements. I encourage you to challenge, ask and contribute in your workshop today and tomorrow. Later on this year we will collect and review the papers presented in the simulator seminar during the past three years and publish them in the simulator seminar proceedings – serie of the Bank of Finland.
Finally I want to thank all speakers, discussants and people involved in organizing the simulator seminar in advance. I wish two rewarding days for all of you in Helsinki!