The Rights of Account Holders
- Elgar Financial Law series
Chapter 8: Summary of Part II
Payment systems are essential components of contemporary commercial infrastructures. Without efficient payments systems the settlement of transactions with securities, commodity contracts and other instruments would be impractical, complicated and expensive. Sellers of securities and other financial assets, as well as providers of services, would be reluctant to fulfill their sides of the bargain unless they were assured that a payment is not only forthcoming but also expeditious. Funds transfers have replaced checks as the dominant payment mechanism for the settlement of commercial and financial transactions. Although the practice of paying via funds transfers is quickly developing and expanding, that is not always the case of the law that supports funds transfer systems. Over the previous two decades a number of LVFTSs, especially in the form of RTGS, have been established. In parallel, national laws of many countries have been reformed and a number of international drafting efforts, at the EU and UN levels, have been undertaken to address the structure of modern payment systems that are composed of bank account relationships. Most jurisdictions have enacted laws and promulgated regulations to govern funds transfers. However, many of these laws and regulations apply only to the relationships at the top level between the operator of the LVFTS and its participants. On the lower levels, legal regulation relies on the concepts underlying payments by checks. Legislators in such jurisdictions should recognize the differences between payments by checks and wire transfers.
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