El Salvador Financial Sector Assessment Program Update

Abstract

Payment systems are a core part of all
 financial systems. The quality of payment systems determines
 the stability of the overall economy, the efficiency and
 reliability of financial intermediation, and the possibility
 for the private sector to innovate and provide new services
 to consumers. This technical note presents the results of
 the assessment of payments, remittances, and securities
 settlement processes in El Salvador, based on international
 standards and best practices. It includes several
 observations for the improvement of the National Payments
 System (NPS) in El Salvador. This note takes into account
 the peculiarities of the jurisdiction of El Salvador:
 namely, the relatively small size of the financial system
 and the dollarized nature of the economy. The central bank
 and other institutions are already planning appropriate
 actions on many of the issues discussed. In some cases,
 however, the team identified additional elements, which are
 discussed in this note.