At the same time, we know that competition may come at the expense of efficiency if it leads to a large number of services which are not coordinated. Maintaining a coordinated payment system while also ensuring a level of competition which can sustain and develop dynamics and innovation can be a difficult balancing act. As mentioned, it can be said that our experiences in Norway have been fairly good. In our view, coordination that promotes positive network effects should be encouraged. Competition considerations should primarily be safeguarded through objective and publicly known criteria for access to the network which makes it possible for new competitors to become established within the common infrastructure. How shall we assess new participants wishing to establish proprietary systems alongside the common infrastructure? This matter was discussed by the Banking Law Commission - which provided for the possibility of institutions other than banks and other financial undertakings to establish systems for payment services if licensed. The present bill does not address this question. It will be reverted to at a later time when the formulation of the regulation of institutions is addressed. Norges Bank has provided its view on these matters in earlier submissions to the Banking Law Commission’s fourth report. At that time, we supported the Commission’s proposal for opening for new participants in this area, by pointing out that such new systems for payment services will not be based on account agreements.
If the banking industry is also able to agree on an adequate loss-sharing agreement, we assume that the remaining danger of systemic risk in this part of the payment system. Gross settlements in NBO Turnover through gross settlements in NBO fluctuates between NOK 100bn and NOK 200bn per day, which is by far the largest portion of the settlement. Since it is a gross settlement, risk would be expected to be minimal or non-existent. Such is not the case, however. Liquidity problems can arise as a result of such factors as technical failure at one or several banks – i.e. operational risk. We have already experienced such situations and seen that they can quickly bring considerable liquidity strains upon other NBO participants. Norges Bank is actively analysing and improving routines associated with such situations in connection with preparations for the year 2000. This work will enable us to be well prepared if such unforeseen situations should arise after the turn of the century. Another risk-creating factor in connection with gross settlement is the extended use of early crediting. Relevant information is lacking, but is our impression that this practice is fairly widespread. The possibility of early crediting is, as is well known, connected to the information exchange model used in the Norwegian payment system (see my previous comments on so-called “T-copying”). This practice - which, by the way, is not in accordance with international recommendations - can result in the payee bank coming into a position of non-controlled exposure in relation to the payer bank.