In accordance with the “Law on Payments and Securities Settlement Systems, Payment Services and Electronic Money Institutions” payment system(security settlement system) is defined as structure providing the infrastructure and common rules required for clearing and settlement transactions made for ensuring fund(security) transfers resulting from transfer orders given by three or more number of participants.
Clearing and settlement are among primary terms related to payment systems. In accordance with the “Law on Payments and Securities Settlement Systems, Payment Services and Electronic Money Institutions” clearing is defined as transactions for transferring the transfer orders sent to the system, mutually communicating these orders and mediating the process of getting provisions if provision is required for before the settlement and, in some cases, offsetting these orders, while settlement is defined as fulfilling the liabilities arising from fund or security transfer between two or more number of parties.
Smooth functioning of the payment systems has critical importance for the stability of the financial system, monetary policy implementations of the central banks and economic growth. The contagion risk of any problem stemming from the payment systems to the several segments of the financial system further increases the vital importance of these systems regarding the financial stability. Due to their strong interest in maintaining financial stability, central banks have an important role in operating payment systems, overseeing them based on internationally recognized standards and making regulations regarding to these functions.