## Practice-by-Practice Assessment of Observance of the IMF MFP Transparency Code — Payment Systems Oversight

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### General
- Purpose: Assessment of Banca d’Italia (BI) observance of the IMF Code of Good Practices on Transparency in Monetary and Financial Policies (MFP Transparency Code) for payment systems oversight, conducted as part of the IMF Financial Sector Assessment Program (FSAP).
- Basis of assessment: pre-mission work; review of laws, regulations, and policies; documentation from BI and ECB websites and official publications; discussions with the BI. The mission took place in July 2005; assessment carried out by Marie Thérèse Camilleri Gilson (IMF).
- Approach: qualitative, based on existing laws, regulations, and practices using a five-part rating system: observed; broadly observed; partly observed; not observed; not applicable.
- Cooperation: The Italian authorities cooperated fully and provided requested information and documentation.

### Institutional and market structure overview
- Characterization of BI oversight:
  - High levels of transparency, benefiting from clarity in the EU-wide institutional framework.
  - Statutory mandate of efficiency and reliability in payment systems established in the 1993 Banking Law; redefined in BI’s 2004 Oversight Provisions to include objectives of financial, market and systemic stability, competitive and fair markets, client asset protection and regulatory enforcement.
  - Active communications policy based on a comprehensive publications and reporting program, including White Papers (1997, 1999).
  - Routine disclosure via publications, strategic/operational/technical papers, direct correspondence, and meetings with market operators.
  - Accountability supported by regular reporting, internal governance arrangements, publication of audited financial statements, and statutory provisions governing staff conduct.

### Practice-by-practice assessment methodology and ratings
- Rating definitions:
  - observed: full observance or insignificant shortcomings;
  - broadly observed: weaknesses exist but not significant enough to raise serious doubts about capacity to achieve objectives;
  - partly observed: shortcomings sufficient to raise doubts about ability to achieve observance and could affect policy effectiveness;
  - not observed: practice not being observed and no substantive progress recorded;
  - not applicable: practice not relevant due to institutional/legal framework.

### V. Clarity of roles, responsibilities and objectives (Practice 5.1) — Summary findings
- Legal and institutional references:
  - EU-level: Article 105 (2) of the Treaty establishing the European Union; Statute of the ESCB and of the ECB (Articles 3.1, 22, Art.12.1 third indent).
  - National-level: 1993 Italian Banking Law, Article 146; 2004 payment systems oversight provisions (OP) issued February 24th 2004 pursuant to article 146 of legislative decree n.385 of 1st September 1993; Article 7 of the OP.
  - Supporting actors: Italian Banking Association (ABI); Cogeban and the CBI association.
  - BI documentation: White Papers 1997 and 1999.
- Overall assessment: Observed

### Sub-practice 5.1.1 — Public disclosure and explanation of broad objectives
- Findings:
  - BI statutory mandate and objectives redefined in 2004 Oversight Provisions to include financial, market and systemic stability, competitive and fair markets, and regulatory enforcement.
  - BI publishes explanatory materials: economic bulletin, Annual Report, other documents via media and Web site.
  - Policy objectives publicly explained through BI officials’ appearances before the Legislature and direct engagement with intermediaries.
- Assessment: Observed

### Sub-practice 5.1.2 — Public disclosure of responsibilities and authority
- Findings:
  - BI responsibilities and authority defined in Banking Law and supporting legal texts; supplemented by MOUs.
  - Specific national decrees cited: Article 10 of DPR No. 144 of 14 March 2001; Article 16 of Decree of the Ministry of Justice No. 458 of 7 November 2001; Article 114 quarter, III paragraph, II indent of the 1993 Banking Law (Implementation of Directive 2000/46/CE — Law No.39 of 1° March 2002); Article 8, paragraph IV of legislative decree No.10 of 23 January 2002 (Implementation of Directive 1999/93/CE).
- Assessment: Observed

### Sub-practice 5.1.3 — Public disclosure of modalities of accountability
- Findings:
  - Accountability upheld through regular reporting to Parliament, publication of the Annual Report, and presentation to the General Meeting of Shareholders.
  - BI subject to Article 97 of the Italian Constitution and Law 241/1990 on Transparency and public rights of access to administrative documents.
- Assessment: Observed

### Sub-practice 5.1.4 — Public disclosure of appointment, terms, and removal criteria
- Findings:
  - Procedures and criteria set out in BI Statute (R.D. 11 June 1936, n. 1067; modified by Presidential Decrees).
  - Governance structure (Article 5): General Meeting of Shareholders; Board of Directors and Committee; Directorate (Governor, Director General, two Deputy Directors General). Appointment and dismissal procedures described (Articles 17, 18, 19).
  - Qualification and incompatibility rules: Articles 59 and 60.
  - Dismissal: Board of Directors may dismiss Governor, Director General and Deputies subject to two-thirds resolution.
  - Identified lack of clarity:
    - BI Statute gives the Governor a mandate for an unlimited period, whereas Article 14 of the ESCB Statute requires national legislation to ensure that “the term of office of a Governor of a national central bank shall be no less than five years.”
    - BI Statute does not specify criteria for removal of the Governor and members of governing bodies; Article 14 of the ESCB Statute stipulates reasons for relief from office.
    - No provisions in BI Statute relating to dismissal criteria for Director General and two Deputy Directors General; BI indicated safeguards exist in case law.
- Assessment: Broadly observed
- Comment: A publicly disclosed reference clarifying the ECB opinion on conformity of the BI Statute with Article 14.2 of the ESCB Statute and general criteria for removal would be required for full observance. The recently adopted Savings Law now explicitly mentions Article 14.2 of the ESCB Statute for the Governor’s dismissal procedures.

### 5.2 The relationship between financial agencies — Summary findings
- Legal basis:
  - ESCB/ECB Statute Articles 12.1 and 14.3 establish modalities for NCBs’ relationships with the ECB.
  - BI and Treasury cooperate on payment system oversight; modalities also established through MOUs.
- International cooperation and MOUs:
  - BI party to a bilateral Memorandum of Understanding underwritten by each of the G10 central banks and the Central Bank of Belgium regarding Swift cooperative oversight; MOU provides for exchange of information.
  - BIS framework cooperation for development of international standards and codes.
  - EU-level MOUs publicly disclosed via press releases: January 2001 MOU on cooperation in Stage 3 of EMU; March 2003 MOU on cooperation in crisis management.
- National cooperation:
  - Ad-hoc consultative working groups with Ministry of Treasury on illicit use of payment cards and irregular use of checks.
  - Collaboration with the Italian Financial Intelligence Unit on prevention of money laundering.
- BI relationships with SROs:
  - BI oversees SROs active in payment systems; SRO obligations include compliance with OP, advance notice of new activities, and submission of self-regulatory codes to BI.
  - Assessment for oversight relationship disclosure: Observed; Not applicable where SROs are not authorized to perform oversight functions.
- Publication channels:
  - Disclosure via normative texts, decrees, BI mission statement, Official Bulletin, Annual Report, BI Web site, and White Papers (1988, 1994, 1995, 1997, 1999).
- Assessment: Observed

### Public disclosure of policy principles, reporting requirements, and fees
- Policy principles and risk management policies disclosed via official gazette, Annual Report, media, BI Web site, and meetings.
- Reporting requirements:
  - Set out in the 1993 Banking Law; BI collects information on interbank functioning and payment instruments; publishes aggregated data in Annual Report and Statistical Bulletin.
  - BI conducts surveys (e.g., quality of banking payment services); participants are notified in writing of scope and use.
- Fees: The BI does not charge fees for its oversight activity.
- Assessment: Observed where applicable; Not applicable for fees and some market regulations.

### Formal procedures for information sharing, consultations, and timing
- International: Eurosystem statement “Role of the Eurosystem in the field of payment systems oversight,” June 2000; public MOUs; BI signatory of the G10/Central Bank of Belgium Swift oversight MOU.
- Internal: April 2004 internal memorandum among BI departments on exchange of information in case of insolvency; mentioned in BI Annual Report.
- Public consultations:
  - Presumption in favor of public consultations for substantive technical regulatory changes; typical consultation period between one and three months; new regulations take effect within three months after consultative process.
  - Specific examples:
    - consultation period of 3 months for “E-payments without frontiers” and for “Oversight standards for euro retail payment systems”;
    - consultation period of 6 months for the Report on Electronic Money Security Standards;
    - final document publication intervals after consultation: 3 months after end of consultation for “E-payments without frontier”; 6 months for the Report on Electronic Money Security Standards; 9 months for “Oversight standards for euro retail payment systems.”
  - Ad hoc consultations (oversight provisions, business continuity guidelines) had consultation periods between 1 and 2 months.
- Examples of two-way communication: correspondence with SIA on Step 2 infrastructure; letters to the Italian Bankers Association about cross border credit transfers; November 2004 business continuity guidelines; the “decalogo” on detecting irregular operations.
- Assessment: Observed

### Reporting and public information on policy changes and outcomes
- Channels: economic bulletin, Annual Report, BI Web site.
- Major policy changes since 1999 published in Official Gazette and on BI Web site.
- Periodic public reports: BI Annual Report and semi-annual Statistical Bulletin on Payment Systems; ad hoc reporting in the semi-annual Economic Bulletin (issues cited: n.39 November 2002; n.42 March 2004; n.44 March 2005).
- Annual Report explains cooperation between oversight and supervision and BI’s anti-trust role pursuant to Art. 20, 2nd paragraph, of Law no. 287/90.
- Assessment: Observed

### 7.2 Public reporting of aggregate payment-system data
- Reporting frequency: annually and semi-annually, consistent with confidentiality requirements.
- Channels: economic bulletin, Annual Report, media releases, BI Web site.
- Data published in aggregate form:
  - (i) the volume and value of payments processed by the national payment systems; and
  - (ii) the volume and value of national payment instruments.
- BI conducts surveys on payment execution time, fees, e-payments, remittance systems; results generally published in Annual Report.
- BI contributes to data collection for the Italian component of TARGET; such data published by the ECB within statistics on selected Euro large value payment systems.
- Payment-instrument data also collected and published in the Red Book (BIS) and the Blue Book (ECB).
- Assessment: Observed

### 7.3 Financial statements and market transactions
- Financial statements: publicly disclosed annually; refer to BI as a whole and do not distinguish payment systems oversight.
- BI consolidates financial statements with the Eurosystem; consolidated data published on a weekly basis. The schedule of release of the consolidated weekly financial statements is publicly available on the ECB web site.
- No market transactions are made in relation to payment system oversight.
- Emergency financial support disclosure: Not relevant for payment system oversight (BI does not provide emergency financial support in connection with oversight).
- Assessment: Observed; Not applicable (emergency support)

### 7.4–7.5 Public information services, publications, and availability of regulations
- BI maintains comprehensive public information services covering policy decisions, operating framework, statistics, legal publications, oversight rules, Annual Report, regional reports, speeches, and testimony.
- Communication and Press Relation Division maintains daily contact with media; press conferences organized after international meetings.
- Publication program: bulletin, research and statistical publications, speeches, non-technical role descriptions, information on ECB initiatives. Annual Report required to be published five months after end of reporting period. Access to publications free of charge.
- Example speeches: Antonio Finocchiaro (4 March 2003); Carlo Tresoldi (30 January 2004); ECB examples by Gertrude Tumpell Gugerell (21 September 2004; 25 April 2005).
- Texts of regulations and guidance: readily available, free of charge, disclosed in official government gazette and on BI Web site.
- Assessment: Observed

### 7.6–7.7 Deposit insurance and consumer protection
- Deposit insurance / policy-holder guarantees: Not relevant for payment system oversight. Assessment: Not applicable
- Consumer protection / dispute settlement: BI does not oversee consumer protection or dispute settlement processes; consumer protection pursued indirectly via efficiency and transparency promotion. Assessment: Not applicable

### VIII. Accountability and assurances of integrity (8.1–8.4.1)
- Parliamentary reporting and availability of officials (8.1):
  - BI reports in parliamentary hearings; no pre-specified schedule; officials available when Parliament requests technical advice. Typical witnesses: Governor, Director General, Deputies. Assessment: Observed
- Audited financial statements and disclosure (8.2, 8.2.1):
  - BI publicly discloses audited financial statements in the Annual Report issued no later than five months following end of financial year.
  - Accounts audited by independent external auditors recommended by the Governing Council of the ECB and approved by the European Council (Article 27 (1) of the ECSB Statute).
  - External auditor mandate: three years, renewable; information on accounting policies and qualifications disclosed. Assessment: Observed
- Internal governance, internal audit, and operating expenses (8.2.2, 8.3):
  - BI Statute provides rules on conflicts of interest and staff conduct; Internal Inspectorate exists and drafts auditing activity information included in the Annual Report.
  - Financial statements include operating expenses and revenues but no breakdown specific to payment systems oversight activities. Assessment: Observed
- Standards of personal conduct and conflict-of-interest rules (8.4, 8.4.1):
  - General rules publicly disclosed in BI Statute; detailed rules in internal staff regulation deposited with CNEL; summaries on BI Web site and available from CNEL.
  - Specific obligations: Title III, Part I of internal staff regulation; Article 12 (4.d) requires notification of employees’ interests.
  - Disciplinary body: “Commissione di disciplina” with sanctions including censure; reduction in salary; suspension (6 months to 1 year); dismissal.
  - Legal protections for officials against legal action: no specific provision; assessed as Not applicable.
  - Overall assessment for standards and conflict rules: Observed

### Recommended action plan (excerpt) and authorities’ response
- Recommended action plan (excerpt):
  - Reference V. 5.1.4: Publicly disclose the applicability of Article 14.2 of the ESCB Statute as regards the dismissal of the Governor and the general criteria for removal of the heads and members of the governing bodies in the absence of such provisions in the BI Statute.
  - Note in source: The recently adopted Savings Law now explicitly mentions Article 14.2 of the ESCB Statute for the Governor’s dismissal procedures.
- Authorities’ response:
  - BI considers the assessment recognizes the high degree of transparency characterizing the policy for payment system oversight.
  - BI reported interaction with IMF was fruitful and highlighted issues likely to positively influence future agency behavior.
  - Regarding institutional framework (point 5.1), BI approved new legislation implementing changes in the management of BICOMP, the retail payment system managed by BI. The new legislation and an explanatory note will be published in the Gazzetta Ufficiale della Repubblica italiana and on the BI’s Web site to enhance public awareness of oversight objectives and institutional decisions. The draft provisions together with the opinion released by the ECB are already available on the ECB Web site.
  - Footnote in source: As regards the dismissal of the Governor of BI see the authorities response to the BCP assessment.

*Source: Practice-by-Practice Assessment of Observance of the IMF MFP Transparency Code — Payment Systems Oversight (IMF FSAP mission material, content unit _cr0677).*

### 1.     Practice-by-Practice Assessment of Observance of the IMF MFP Transparency .............4

### Practice-by-Practice Assessment of Observance of the IMF MFP Transparency Code — Payment Systems Oversight

### General
- Purpose: Assessment of Banca d’Italia (BI) observance of the IMF Code of Good Practices on Transparency in Monetary and Financial Policies (MFP Transparency Code) for payment systems oversight, conducted as part of the IMF Financial Sector Assessment Program (FSAP).
- Basis of assessment: pre-mission work; review of laws, regulations, and policies; documentation from BI and ECB websites and official publications; discussions with the BI. The mission took place in July 2005; assessment carried out by Marie Thérèse Camilleri Gilson (IMF).
- Assessment approach: qualitative, based on existing laws, regulations, and practices using a five-part rating system: observed; broadly observed; partly observed; not observed; not applicable.
- Cooperation: The Italian authorities cooperated fully and provided requested information and documentation.

### Institutional and market structure overview
- Characterization of BI oversight:
  - High levels of transparency, benefiting from clarity in the EU-wide institutional framework.
  - Active contribution to timely disclosure of policy developments and exchange of information.
  - Statutory mandate of efficiency and reliability in payment systems established in the 1993 Banking Law, redefined in BI’s 2004 Oversight Provisions to include objectives of financial, market and systemic stability, competitive and fair markets, client asset protection and regulatory enforcement.
  - Active communications policy based on a comprehensive publications and reporting program.
  - White Papers: 1997 explains the institutional framework and guiding principles; 1999 provides detailed analysis of methods of intervention and areas of interest.
  - Routine disclosure of progress toward policy objectives and two-way communication with markets via regular publications, strategic/operational/technical papers, direct correspondence, meetings with market operators.
  - Accountability supported by regular reporting, internal governance arrangements, publication of audited financial statements, and statutory provisions governing staff conduct.

### Practice-by-practice assessment methodology
- Ratings explained:
  - observed: full observance or insignificant shortcomings;
  - broadly observed: weaknesses exist but not significant enough to raise serious doubts about capacity to achieve objectives;
  - partly observed: shortcomings sufficient to raise doubts about ability to achieve observance and could affect policy effectiveness;
  - not observed: practice not being observed and no substantive progress recorded;
  - not applicable: practice not relevant due to institutional/legal framework.

### V. Clarity of roles, responsibilities and objectives of financial agencies responsible for financial policies (Practice 5.1)
- Practice 5.1 statement: The broad objective(s) and institutional framework of financial agencies should be clearly defined, preferably in relevant legislation or regulation.
- Description (key legal and institutional references):
  - EU-level:
    - Article 105 (2) of the Treaty establishing the European Union: “The basic tasks to be carried out through the ESCB shall be [...] to promote the smooth operation of payment systems.”
    - Statute of the ESCB and of the ECB:
      - Article 3.1: “In accordance with Article 105(2) of this Treaty, the basic tasks to be carried out through the ESCB shall be ...to promote the smooth operation of payment systems ..”
      - Article 22, Clearing and payment systems: “The ECB and national central banks may provide facilities, and the ECB may make regulations, to ensure efficient and sound clearing and payment systems within the Community and with other countries.”
      - Art.12.1, third indent: ECB shall have recourse to national central banks as appropriate.
  - National-level:
    - 1993 Italian Banking Law, Article 146: “Banca d’Italia shall promote the regular operation of payment systems. For this purpose, it may issue regulations to ensure the efficiency and reliability of clearing and payment systems.”
    - 2004 payment systems oversight provisions (OP) issued by the Governor of the BI (February 24th 2004 regulations pursuant to article 146 of legislative decree n.385 of 1st September 1993; published in official gazette n.75 of March 30th 2004). Article 7 of the OP authorizes BI to “issue general and specific rules implementing what is provided for in these provisions taking into account inter alia the degree of importance of the systems as evaluated according to Article 2.2 and their characteristics.”
  - Supporting institutional actors and arrangements:
    - Italian Banking Association (ABI): coordinates interbank agreements, fixes uniform operational and accounting methods in interbank relations; responsible for operational instructions of interbank procedures for automated retail payments.
    - Cogeban and the CBI association (within ABI premises): manage Pagobancomat (debit card circuit) and corporate banking activity; set standards, monitor participant behavior, fix operating rules.
  - BI documentation: White Papers of 1997 and 1999 explain objectives, framework, methods of intervention and areas of interest.

- Assessment: Observed

### Sub-practice 5.1.1 — Public disclosure and explanation of broad objectives
- Description:
  - BI statutory mandate and objectives redefined in 2004 Oversight Provisions to include financial, market and systemic stability, competitive and fair markets, and regulatory enforcement.
  - BI publishes explanatory materials: economic bulletin, Annual Report, other documents via media and Web site.
  - Policy objectives publicly explained through BI officials’ appearances before the Legislature.
  - BI engages in direct correspondence with financial intermediaries, issues instructions, and holds meetings with interested parties.
- Assessment: Observed

### Sub-practice 5.1.2 — Public disclosure of responsibilities and authority to conduct financial policies
- Description:
  - BI responsible for promoting security and efficiency of the payment mechanism and ensuring nondiscriminatory provision of payment services to all banks to safeguard competition.
  - Authority and duties defined in Banking Law and supporting legal texts, supplemented by a memorandum of understanding (see practice 5.2).
  - Specific decrees reinforcing BI role:
    - Article 10 of DPR No. 144 of 14 March 2001: “Under Article 146 of the 1993 Banking Law, the Banca d’Italia adopts all measures necessary to ensure the integration of the Post Office in the payment system and the interoperability of bank and postal payment” (informal translation).
    - Article 16 of Decree of the Ministry of Justice No. 458 of 7 November 2001: “The Banca d’Italia, in its responsibility as manager of the database, banking and financial supervisor and payment system overseer, shall verify compliance with the rules governing the database by banks, postal offices and payment cards issuers” (informal translation).
    - Article 114 quarter, III paragraph, II indent of the 1993 Banking Law (Implementation of Directive 2000/46/CE on electronic money — Law No.39 of 1° March 2002): “The Banca d’Italia, pursuant to Article 146, shall issue provisions aimed at fostering the development of electronic money, ensuring its security and promoting the regular operation of the related circuit” (informal translation).
    - Article 8, paragraph IV of legislative decree No.10 of 23 January 2002 (Implementation of Directive 1999/93/CE on electronic signature): “The electronic identity card and the national card of services can be used in order to perform payments among private entities and the public administration, according to indications provided by the Prime Minister Cabinet or, on his behalf, by the Ministry for technological innovation, in agreement with the Ministry of Economy and Finance, having asked the opinion of the Banca d’Italia.”
- Assessment: Observed

### Sub-practice 5.1.3 — Public disclosure of modalities of accountability
- Description:
  - Accountability for payment systems oversight upheld through regular reporting to Parliament, publication of the Annual Report, and presentation to the General Meeting of Shareholders.
  - BI subject to Article 97 of the Italian Constitution on good functioning and impartiality, and Law 241/1990 on Transparency and public rights of access to administrative documents.
- Assessment: Observed

### Sub-practice 5.1.4 — Public disclosure of procedures for appointment, terms of office, and removal criteria for governing bodies
- Description:
  - Procedures and criteria set out in BI Statute (originally R.D. 11 June 1936, n. 1067; modified by Presidential Decrees; updated version available on BI Web site).
  - Governance structure (Article 5): powers vested in a) General Meeting of Shareholders; b) Board of Directors and the Committee of the Board of Directors; c) Directorate composed of the Governor, the Director General and two Deputy Directors General. Governor entrusted with policy formulation and implementation. Board Committee has advisory role. Oversight by auditors and examiners (Article 23) limited to administrative control.
  - Appointment procedures:
    - Article 17: thirteen members of the Board of Directors elected by General Meetings of Shareholders at main branches, one director per main branch; term of five years and may be re-elected. A meeting of the Board may be called by the senior Director to appoint and dismiss the Governor (Article 19).
    - Board appoints four directors at its first meeting each year to form, with the Governor, the Board Committee (Article 18).
    - Governor may call Board Meeting to appoint and dismiss members of the Directorate.
    - Article 19: “appointments and dismissals must be approved by a decree of the President of the Republic acting on a proposal from the President of the Council of Ministers in agreement with the Minister of the Treasury after consulting the Council of Ministers.”
  - Qualification and incompatibility rules (Articles 59 and 60): Governor, members of Board and Directorate may not hold political office, be members of any bank, engage in commerce, operate in the stock exchange, or hold positions of responsibility in any company, except where authorized by the Board and only in recognized interests of the Bank.
  - Dismissal procedures:
    - Board of Directors responsible for dismissing Governor, Director General and two Deputy Directors General subject to a resolution from two thirds of its members (under the chairmanship of the senior Director for dismissal of the Governor).
  - Identified lack of clarity:
    - BI Statute gives the Governor a mandate for an unlimited period of time, whereas Article 14 of the ESCB Statute requires national legislation to ensure that “the term of office of a Governor of a national central bank shall be no less than five years.”
    - BI Statute does not specify criteria for removal of the Governor and members of governing bodies; Article 14 of the ESCB Statute stipulates a Governor may be relieved from office only if he no longer fulfils the conditions required for his duties or if guilty of serious misconduct.
    - 1998 EMI Convergence Report referenced for direct applicability of Treaty criteria for dismissing the Governor in absence of specific national provisions.
    - No provisions in BI Statute relating to dismissal criteria for Director General and two Deputy Directors General; BI indicated safeguards against arbitrary dismissal exist in case law (members may only be removed on grounds of non-fulfillment of goals).
- Assessment: Broadly observed
- Comments:
  - A publicly disclosed reference clarifying (i) the ECB opinion on conformity of the BI Statute with Article 14.2 of the ESCB Statute regarding the Governor, and (ii) the general criteria for removal of heads and members of governing bodies would be required for full observance.
  - The recently adopted Savings Law now explicitly mentions Article 14.2 of the ESCB Statute for the Governor’s dismissal procedures.

*Source: Practice-by-Practice Assessment of Observance of the IMF MFP Transparency Code — Payment Systems Oversight (IMF FSAP mission material).*

### 5.2 The relationship between financial agencies should be publicly disclosed.

### 5.2 The relationship between financial agencies should be publicly disclosed.

### Legal and institutional disclosure of relationships
- Relationships between national central banks (NCBs) and the ECB can be inferred from Article 12.1 and Article 14.3 of the ESCB/ECB Statute, which state respectively:
  - Article 12.1: “The Governing Council shall adopt the guidelines and take the decisions necessary to ensure the performance of the tasks entrusted to the ESCB under this Treaty and this Statute [....] To the extent deemed possible and appropriate [...], the ECB shall have recourse to the national central banks to carry out operations which form part of the tasks of the ESCB”
  - Article 14.3: “The national central banks are an integral part of the ESCB and shall take the necessary steps to ensure compliance with the Guidelines and instructions of the ECB and shall require that any necessary information be given to it.”
- The modalities for relationships and cooperation between the Banca d’Italia (BI) and international counterparts are also established through MOUs.
- At the national level, BI and the Treasury engage in ongoing cooperation in payment system oversight.

### International cooperation and MOUs
- BI is a party to a Memorandum of Understanding underwritten bilaterally by each of the G10 central banks and the Central Bank of Belgium regarding Swift cooperative oversight. The MOU:
  - sets out the main principles underlying activities;
  - sets out the areas of cooperation; and
  - explicitly provides for the exchange of information between competent authorities.
- Within the BIS framework, the oversight function of BI cooperates with other central banks for the development of international standards and codes of conduct.
- At the EU level, institutional relationships in payment systems oversight are clarified by MOUs publicly disclosed through press releases:
  - A MOU dating back to January 2001 deals with co-operation and information sharing between payment systems overseers and banking supervisors in Stage 3 of economic and monetary union.
  - A MOU of March 2003 fixes high level principles of cooperation between the banking supervisors and central banks of the European Union in crisis management situations.

### National cooperation and ad-hoc arrangements
- At a national level, BI cooperates with the Ministry of Treasury on an ad-hoc basis through consultative working groups to discuss issues such as:
  - the illicit use of payment cards; and
  - the irregular use of checks.
- Prevention of money laundering is discussed in collaboration between the BI and the Treasury within the Italian Financial Intelligence Unit.
- Assessment recorded in source: Observed.

### BI relationships with self-regulatory organizations (SROs)
- BI oversees SROs active in payment systems, including private systems (quasi systems) and private payment circuits (e.g., domestic cards).
- Phases for exchange of information exist in the settlement process of retail payments.
- The BI’s relationship with SROs is established in the regulatory framework and disclosed through established publication channels.
- SRO obligations include:
  - compliance with the OP in providing data and information requested by the BI;
  - advance notice if new payment activities or modifications to existing ones are envisaged;
  - submission of new codes of conduct and self-regulatory codes concerning payments issues to the BI.
- Assessment recorded in source: Observed (for oversight relationship disclosure); Not applicable (where SROs are not authorized to perform oversight functions).

### Publication channels and transparency practices
- Institutional roles and policy principles are publicly disclosed through:
  - normative texts, decrees and statements (including the ECB Statement on the “Role of the Eurosystem in the field of payment systems oversight”, June 2000);
  - BI mission statement, the Official Bulletin, the Annual Report, and the BI Web site;
  - ad-hoc detailed reference documents and White Papers (see titles and years below).
- BI White Papers and documents mentioned:
  - Banca d’Italia, White Paper on the Payment System in Italy, Rome, 1988.
  - Banca d’Italia, Libro bianco sui pagamenti interbancari - Linee strategiche, motivazione e implicazioni della riforma dei sistemi di compensazione e di regolamento interbancari, Roma, 1994.
  - Banca d’Italia, Institutional Issues, Interbank payments in Italy: lines of reform, Rome, April 1995.
  - Banca d’Italia, White Paper on Payment System Oversight. Guiding principles for performance of the function, Rome, May 1997.
  - Banca d’Italia, White Paper on Payment System Oversight. Objectives, Methods, Areas of Interest, Rome, November 1999.
- Assessment recorded in source: Observed.

### Public disclosure of policy principles, reporting requirements, and fees
- General policy principles including risk management policies are disclosed via:
  - the official gazette;
  - the Annual Report;
  - communication with the media;
  - updates on the BI Web site; and
  - ad-hoc meetings with financial intermediaries and national associations.
- Reporting requirements:
  - Set out in the 1993 Banking Law, enabling BI to collect information on interbank functioning of payment systems and use of payment instruments.
  - BI collects statistical data via specific surveys (e.g., quality of banking payment services) and publishes aggregated data in the Annual Report and the Statistical Bulletin.
  - For surveys, BI approaches participants in writing explaining scope, application and intended use of requested information.
- Fees:
  - The BI does not charge fees for its oversight activity.
- Assessment recorded in source: Observed where applicable; Not applicable for fees and some market regulations.

### Formal procedures for information sharing, consultations, and timing
- International procedures:
  - Public statement “Role of the Eurosystem in the field of payment systems oversight,” June 2000, sets principles of cooperation and information sharing.
  - Press release publicly disclosed the establishment of two MOUs (see 5.2).
  - BI is signatory of the bilateral G10/Central Bank of Belgium Swift oversight MOU.
- Internal BI arrangements:
  - April 2004 internal memorandum signed by BI departments (oversight, supervision and market surveillance) dealing with exchange of information in case of insolvency of intermediaries participating in securities and payments clearing and settlement systems; its existence was mentioned in the BI Annual Report.
- Public consultations:
  - Presumption in favor of public consultations for substantive technical regulatory changes; consultation period between one and three months; new regulations take effect within three months after conclusion of consultative process.
  - Strategic, operational and technical papers are published to inform and consult market operators.
  - ECB website gives access to public consultations launched by the Governing Council and performed by NCBs; timing set by the ECB.
  - Specific consultation examples and timings:
    - consultation period of 3 months for “E-payments without frontiers” and for “Oversight standards for euro retail payment systems”;
    - consultation period of 6 months for the Report on Electronic Money Security Standards;
    - final document publication intervals after consultation: 3 months after end of consultation for “E-payments without frontier”; 6 months for the Report on Electronic Money Security Standards; 9 months for “Oversight standards for euro retail payment systems.”
  - Ad hoc consultations (oversight provisions, business continuity guidelines) had consultation periods between 1 and 2 months.
- Examples of two-way communication:
  - Correspondence between BI and SIA on oversight of the infrastructure for Step 2;
  - Letters to the Italian Bankers Association about cross border credit transfers;
  - Operative instructions such as guidelines for business continuity of significant infrastructure services issued in November 2004;
  - The “decalogo” to detect irregular operations addressing money laundering countermeasures.
- Assessment recorded in source: Observed.

### Reporting and public information on policy changes and outcomes
- Significant changes in payment systems oversight policies are publicly announced and explained in a timely manner via:
  - the economic bulletin;
  - the Annual Report;
  - the BI Web site.
- Major policy changes since 1999 (establishment of payment system oversight office) are mainly legislative and published in the Official Gazette and available on the BI Web site.
- BI issues periodic public reports on major developments:
  - The BI Annual Report and semi-annual Statistical Bulletin on Payment Systems provide disclosure on national payment systems and instruments.
  - Ad hoc reporting in the semi-annual Economic Bulletin. Examples cited:
    - issue n.39, November 2002 “La Centrale d’allarme interbancaria (CAI)” p.1*;
    - issue n.42, March 2004 “La politica di sorveglianza dei sistemi e degli strumenti di pagamento al dettaglio in Europa” p.1*;
    - issue n.44, March 2005 “I progressi nella realizzazione di un’area unica dei pagamenti in euro” p.4*.
  - The Annual Report explains cooperation between payment systems oversight and banking and financial supervision and notes BI’s role pursuant to Art. 20, 2nd paragraph, of Law no. 287/90 as anti-trust authority for the banking sector.
  - BI also reports on support provided to other functional areas: monetary policy, economic research, supervision of financial markets, and legal research.
- Assessment recorded in source: Observed.

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0677.pdf*

### 7.2 Financial agencies should seek to ensure that, consistent with confidentiality requirements,

### 7.2 Financial agencies should seek to ensure that, consistent with confidentiality requirements, there is public reporting of aggregate data related to their jurisdictional responsibilities on a timely and regular basis.

### Public reporting of aggregate payment-system data (7.2)
- Aggregate data related to the BI’s jurisdictional responsibilities in payment systems oversight are publicly reported annually and semi-annually, consistent with confidentiality requirements.
- Channels of disclosure: economic bulletin, Annual Report, release to the media, and posted on the Web site.
- Data published in aggregate form in the Annual Report refer to:
  - (i) the volume and value of payments processed by the national payment systems; and
  - (ii) the volume and value of national payment instruments.
- BI conducts surveys on specific topics in payment systems (payment execution time, fees for payment instruments, development of e-payments, developments in remittance systems); results are generally published in the BI Annual Report.
- BI contributes to data collection for the Italian component of TARGET; such data are published by the ECB within statistics on selected Euro large value payment systems.
- Payment-instrument data are also collected and published in the Red Book (BIS) and the Blue Book (ECB).
- Assessment: Observed

### Financial statements and market transactions (7.3, 7.3.1)
- Financial statements are publicly disclosed on a pre-announced schedule (annually) but refer to the BI as a whole and do not distinguish the function of payment systems oversight.
- BI consolidates its financial statements with the Eurosystem; consolidated data are published on a weekly basis. The schedule of release of the consolidated weekly financial statements is publicly available on the ECB web site.
- No market transactions are made in relation to payment system oversight.
- Assessment: Observed
- Emergency financial support disclosure (7.3.1): Not relevant for payment system oversight since the BI does not provide emergency financial support in connection with its oversight of the payment system.
- Assessment: Not applicable

### Public information services and publications (7.4, 7.4.1, 7.4.2)
- The BI maintains comprehensive public information services to disseminate:
  - policy decisions and policy announcements;
  - the operating framework, targets and objectives related to the payment system;
  - statistics and data, economic bulletins and papers, legal publications, payment system oversight rules, the Annual Report, regional economic reports, texts of senior officials’ speeches and testimony to Parliamentary committees.
- All information material is published on the Web site and distributed to public and private institutions and the media.
- The Communication and Press Relation Division of the Governor’s Secretariat is in daily contact with media representatives; press conferences are organized at the end of international meetings.
- Publications program includes: the bulletin, ongoing research and statistical publications, speeches of officials, non-technical descriptions of the BI’s role and information about relevant ECB initiatives. The BI is legally required to publish its Annual Report, issued five months after the end of the relevant reporting period. Access to publications is free of charge.
- Senior officials appear in parliamentary hearings and explain objectives and performance in public speeches and media interviews. There is a presumption in favor of releasing texts of statements to the public via the economic bulletin, media, or Web site.
- Examples of speeches by BI representatives: “Banca d’Italia e i servizi su rete” by Antonio Finocchiaro (4 March 2003); “Le innovazioni nel sistema dei pagamenti elettronici: luci e ombre nella diffusione delle tecnologie dell’informazione e della comunicazione” by Carlo Tresoldi (30 January 2004).
- Examples of ECB speeches: “Card payments and the European financial integration” by Gertrude Tumpell Gugerell (21 September 2004); “The need for regulatory involvement in the evolution of payment systems” by Gertrude Tumpell Gugerell (25 April 2005).
- Assessment: Observed

### Availability of regulations and guidance (7.5)
- Texts of regulations, generally applicable directives and guidelines issued by the BI and other bodies responsible for payment systems oversight are readily available to the public, free of charge, disclosed in the official government gazette and posted on the BI Web site.
- Assessment: Observed

### Deposit insurance, consumer protection, and dispute settlement (7.6, 7.7)
- Deposit insurance / policy-holder guarantees disclosure (7.6): Not relevant for payment system oversight.
  - Assessment: Not applicable
- Consumer protection / dispute settlement (7.7): The BI does not oversee consumer protection arrangements or dispute settlement processes. Consumer protection is indirectly pursued through promotion of efficiency and transparency of national payment systems and instruments.
  - Assessment: Not applicable

### VIII. Accountability and assurances of integrity by financial agencies

### Parliamentary reporting and availability of officials (8.1)
- BI publicly reports in parliamentary hearings to report on conduct of financial policies, explain policy objectives, and exchange views on the state of the financial system.
- There is no pre-specified schedule; appearances occur whenever Parliament needs technical advice. Officials are not required by law to appear but stand available to do so.
- Typical witnesses: the Governor, the Director General, the Deputies of the Director General, and occasionally other senior officials.
- Assessment: Observed

### Audited financial statements and disclosure (8.2, 8.2.1)
- BI publicly discloses audited financial statements (balance sheet, income statement, notes to the accounts) in the Annual Report, issued no later than five months following the end of its financial year.
- BI consolidates its financial statements with the Eurosystem; consolidated weekly financial statements are publicly available on the ECB web site.
- Accounts of the BI are audited by independent external auditors recommended by the Governing Council of the ECB and approved by the European Council (Article 27 (1) of the ECSB Statute).
- External auditors are chosen from a restricted list of companies, members of the association of auditors; the external auditor’s mandate has a duration of three years, with the possibility to be renewed.
- Information on accounting policies and any qualification to the statements are an integral part of publicly disclosed financial statements. BI applies special statutory provisions in the guidelines approved by the Governing Council of the ECB and the rules laid down in the Civil Code with, where appropriate, generally accepted accounting standards.
- Assessment: Observed

### Internal governance, internal audit, and operating expenses (8.2.2, 8.3)
- The BI Statute provides rules concerning conflicts of interests of officials and governing bodies and general rules on staff conduct.
- BI functions and organizational structure are explained in a pamphlet on its Web site, disclosing the existence of an Internal Inspectorate responsible for drafting information on auditing activity released in the Annual Report.
- BI financial statements published in the Annual Report include information on operating expenses and revenues, but no breakdown specific to payment systems oversight activities.
- Assessment: Observed

### Standards of personal conduct and conflict-of-interest rules (8.4, 8.4.1)
- Standards for conduct and rules to prevent exploitation of conflicts of interest exist but are not publicly disclosed in detail; only general rules of conduct in the BI’s Statute are disclosed.
- Detailed rules are contained in an internal staff regulation (Regolamento del Personale) deposited with the CNEL (Consiglio nazionale dell’economia e del lavoro). Summaries are on the BI Web site and available upon request from CNEL.
- Specific provisions:
  - Title III, Part I of the internal staff regulation contains obligations, prohibitions, incompatibilities and responsibility of BI staff.
  - Article 12 (4.d): employees are obliged to notify the BI of any interests – financial or non financial in nature – that they and their relatives may have with respect to matters falling within the remit of their office and which can generate potential conflicts of interest.
  - Staff are prevented from taking advantage of knowledge on activities performed by the BI, from performing activities that run counter to BI interests, taking on other employment, and engaging in securities transactions in stock exchanges.
- Disciplinary procedures:
  - A special body “Commissione di disciplina” proposes disciplinary sanctions; members are designated by the Governor: one Deputy Director General (chairman), the head of the Personnel Management Department, and three other senior staff.
  - Possible sanctions: (i) censure; (ii) reduction in salary; (iii) suspension (with suspension of salary payment) for a period of 6 months to 1 year; (iv) dismissal.
- Legal protections for officials (8.4.1): There is no specific provision offering legal protection to the BI and its employees, who are public officials, against legal action stemming from measures adopted in the performance of their functions.
  - Assessment: Not applicable
- Assessment for standards and conflict rules: Observed

### Recommended action plan and authorities’ response

### Recommended action plan (excerpt)
- Reference V. 5.1.4: Publicly disclose the applicability of Article 14.2 of the ESCB Statute as regards the dismissal of the Governor and the general criteria for removal of the heads and members of the governing bodies in the absence of such provisions in the BI Statute.
- Note: The recently adopted Savings Law now explicitly mentions Article 14.2 of the ESCB Statute for the Governor’s dismissal procedures.

### Authorities’ response
- BI considers the assessment recognizes the high degree of transparency characterizing the policy for payment system oversight.
- BI reports that interaction with IMF representatives was fruitful and highlighted issues likely to positively influence future agency behavior.
- Regarding the institutional framework (point 5.1), BI approved new legislation implementing changes in the management of BICOMP, the retail payment system managed by BI. The new legislation and an explanatory note will be published in the Gazzetta Ufficiale della Repubblica italiana and on the BI’s Web site to enhance public awareness of oversight objectives and institutional decisions. The draft provisions together with the opinion released by the ECB are already available on the ECB Web site.
- Footnote: As regards the dismissal of the Governor of BI see the authorities response to the BCP assessment.

*Source: IMF staff report content unit _cr0677 – Payment Systems Oversight (sections 7.2–8.4.1, Recommended action plan and authorities’ response).*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0677.pdf_