What is the CLS payment system?

2016-07-15 00:00:00:

Globalization is an excellent incentive for the development of numerous payment systems that operate online. Over the years of development of financial relationships between companies and entire states, virtual digital money has appeared on the Internet that does not have physical embodiment. To exchange such a currency, new resources are constantly being created, which differ among themselves in functionality, security and other parameters. With the help of modern payment systems, an exchange is possible at any time of the day, 365 days a year. Each of them is software and has a number of advantages and disadvantages.

The CLS payment system is unknown to many Internet users, so not everyone is familiar with its features and how it works. Literally, it translates as "continuous linked account." The global platform performs conversion money transactions without being geographically tied to a specific country.

CLS resource: development history

The payment system is the brainchild of a group of dealers and appeared in 1997. For its existence, a settlement bank was created - CLS Bank. Two years later, the initiators of the creation of CLS received a license in the United States, which allowed them to work in the foreign exchange market. In the first months of its existence, the institutions shares were acquired by about 70 largest companies in the world, which made it possible to open the markets of many countries of the planet. The payment service has acquired a global status at the start of its existence.

The CLS resource has earned its popularity due to its team of professionals and the highest level of security. The most famous financial institutions in the world have financially supported the development of electronic banking. Thanks to this, CLS Bank received a special status as a US credit institution. Among its controlling bodies were the Central Banks of developed countries, together with the US Federal Reserve.

Among the main tasks of the bank was to conduct multicurrency netting, which reduces the risks of trading activities of brokers on the Forex platform. System security is ensured through the use of "payment-versus-payment". Transactions in a single currency are carried out only after settlement in the required currency. CLS Bank acts as an intermediary, carrying out various settlement operations.

CLS payment system: subtleties of the mechanism of functioning

The CLS payment system works according to a simple scheme, which differs from the standard principle of settlements between banks. Usually counterparties make money transfers using selected banks. In this system, the participants in the transaction use the services of CLS Bank to conduct transactions. This simplifies all calculations to a pay-by-pay basis. Electronic banking sends funds after receiving the exchanged money. The CLS approach minimizes risks and guarantees the safety of customers and their investments.

Founders have their own current accounts, through which users send instructions regarding the execution of transactions to the electronic bank. The latter undertakes to complete all tasks within the time specified by the client. Other users do not have access to banking operations, which gives additional confidentiality to transactions. To obtain data, clients have to cooperate with other participants who have open correspondent accounts with the bank. All payments are made in three steps:

With the end of the day in European time, the dealer sends instructions to the CLS resource regarding the following actions.
Starting at 06:30, CLS Bank determines the current positions of the players currencies, while sending information about payments to dealers.
In the period from 7 to 12 in the morning, previously planned operations are carried out.
The electronic bank uses 7 national banking systems during the day. Australian transactions take place at a later time, right at the time of the transaction. All payments between users are made on the basis of "net settlements", while CLS Bank settles with the client on the basis of "gross accounts".

CLS resource: work summary

The number of clients working with the CLS global payment system is growing steadily every year. Every second settlement carried out with the exchange of funds passes through the CLS electronic bank. More than 600 thousand transactions are carried out daily, amounting to about US $ 3500 billion. If initially the system worked with only 7 currencies, today it allows settlements in 18 different monetary units.

The Central Bank of Russia is in favor of joining the international system. And if this happens, the ruble will surely fall into the number of convertible currencies. Therefore, it will be possible to exchange the domestic currency abroad.

The CLS resource will be beneficial for tourists and entrepreneurs who operate outside Russia. It will be possible to slowly exchange currency from any country in the world. Today it is difficult to estimate how much time Russia will have to spend on the implementation of the international payment system. But we can certainly assume that the emergence of CLS in the countrys financial space may cause fluctuations in the domestic currency market.