BoE says the direct debit system needs protection

Tim Wallace
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THE interbank payment systems which keep the country’s finances working might not be sufficiently well protected against banks going bust or the development of technical problems, a Bank of England report warned yesterday.

For example, Bacs – the system that handled 5.6bn direct debit payments last year – could face a liquidity crisis if a large member defaults. Currently, if a member does default, its debit position could exceed liquidity committed by other members.

“Further progress” is also needed to make sure the Faster Payments Service adequately prioritises systemic risk management, the report said.

But the report gave overall praise to the service providers for reducing risks and building protections against crises.