Functions
What are the main functions of the Central Bank?
CBSM undertakes the following functions:
The Central Bank exercises control over the supervised entities and their activities; for this purpose, it issues its own regulations, requires periodic statistics and qualitative data, and carries our on-site inspections. In case of temporary cash imbalances, the Central Bank intervenes through its loans, adequately guaranteed, in order to safeguard the stability of the financial intermediaries. The function of the supervisory authority is performed taking into account the purpose of protecting savings that the Statute assigns to the Central Bank.
The Central Bank will be able to conduct currency business equal to that carried out in Italy by Credit Companies that enjoy the currency qualification of a full-operation licensed bank.
The maintenance of an efficient payments system is a prerequisite for the orderly conclusion of the economic transactions. The Central Bank aims at having the payment system of San Marino work steadily and in compliance with high security standards, so that it may offer to the economic operators the best conditions for settling their transactions. Through these two activities, the Central Bank manages and controls a dedicated local IT network. Additionally, the CBSM operates for the purpose of having the payment system of San Marino linked to the foreign systems, so as to maximise integration and facilitate payment from and to other countries.
The Central Bank works for the prevention of fraud and counterfeiting of euro banknotes and coins with systemic management of authenticity and suitability checks, based on the provisions of the Monetary Convention and in consultation with the international authorities in this regard. In addition, BCSM manages systemic requirements for cash supplies and pours to European sector authorities, as well as the collection of statistical information on cash recirculation.
Consultancy services to the State, through the Offices of the Public Administration, individual Secretaries of State, or directly to the State Congress, as regards a wide range of activities and issues. The Central Bank offers its contribution of experience and professionalism on the proposed introduction of new laws, individual projects and operating activities.
The Central Bank gathers statistical data and other information from supervised entities; this activity is carried out either with set frequencies or on a case-by-case basis. The data received, after stages of verification and validation, feed internal statistics, which are used for supervisory purposes, or are aggregated for statistics intended for publication, or are processed and transmitted to international contacts and included in statistics of the different financial systems worldwide.
The management of the Sole Treasury Service of the State and by the Public Authorities and Autonomous Undertakings has been entrusted to the Central Bank since 1993. The CBSM makes all payments (for salaries, pensions, and supplies of all kinds) based on the payment orders issued, and handles collections of all taxes (either directly or made through bank counters). Additionally, it produces a periodic reporting (from the daily cash situation to annual reporting) to different agencies.
The State Tax Department, established in 2004 and entrusted to the Central Bank, is focused on managing the collection of taxes, levies, duties and sanctions of the Tax Authority. Based on the Entries into the Register made by the imposing Entities, the CBSM prepares the tax collection notices, arranges the mailing, the notification, either by hand or "at the door", and the collection thereof. Where the conditions provided for by law are met, the Central Bank may grant payment extensions to the taxpayers. If the tax collection notices are not paid by their expiry date, the CBSM shall enforce the collection thereof through appropriate enforcement procedures, which may end with the sale of the seized assets.
On such amounts, the Central Bank pays the remunerations agreed upon with the State Congress. The resources deposited by the PA, together with the assets of the Bank and the other funds collected (mainly from interbank funding) are invested on the capital markets with a view of optimising returns in line with specific diversification and risk reduction criteria.
The Central Bank acts as paying agent and centralised manager of government securities issued by the Republic of San Marino. Therefore, the CBSM takes care of the electronic recording thereof, being dematerialised securities, the issuance and settlement thereof, the coupon payment and capital repayment. The issuing, subscription and circulation of the government securities of the Republic of San Marino are regulated by art. 12 of Law no. 153 of 31 October 2013 and by the Delegated Decree no. 173 of 18 December 2013.
The Central Bank of the Republic of San Marino holds relationships with a wide range of foreign contacts: central banks and supervisory authorities, international institutions (International Monetary Fund, World Bank, Bank for International Settlements), international Organisations (OECD, European Commission, etc.), Associations (International Association of Deposit Insurers, European Association of Deposit Insurers, etc.). For most of these reference points, the CBSM also produces a series of statistical data and information that ensure to the Republic of San Marino an approbate visibility at an international level.
In the field of trust, the Central Bank achieves three different functions: to supervise financial trustees (if the office of trustee is exercised by a person authorized under the Law No. 165 of November 17, 2005); to check the existence and permanence of the requirements for the professional exercise of the office of trustee in the territory of San Marino, for the purpose of keeping the Professional Trustee Register pursuant to the Delegate Decree No.49 of March 16, 2010; to keep the Register of the Trust pursuant to the Delegate Decree No.50 of March 16, 2010.
Law no. 191 of 6 December 2011, for the establishment in the Republic of San Marino of the supplementary welfare fund named FONDISS, assigned to the Central Bank of the Republic of San Marino the function of custodian bank of the relevant resources. Therefore, the CBSM, besides performing for FONDISS the Treasury functions related to the collection of welfare contributions and to the payment of the benefits, also performs the typical activities of a custodian bank; these activities are particularly important in terms of protection of the taxpayers and control.
The Fund is an asset with its own independent purpose, that is to say, it has complete financial autonomy from the Central Bank and guarantees the depositors, within the extent of its assets, with the possibility to resort to extraordinary contributions or external loans, in the cases of administrative compulsory winding-up of the participating banks.
Pursuant to Article 23 quinquies, paragraph 3, of Law No. 92 of June 17, 2008 , and subsequent amendments, introduced by Article 37 of Decree No. 154 of October 31, 2023, concerning the alignment of national legislation with international conventions and standards on the prevention and combating of money laundering and terrorist financing, the Central Register of Beneficial Ownership of Trusts (CRBOT) has been established, effective from August 23, 2024.
To what extent are the employees in Supervision equipped to effectively meet the needs of the current financial system
The Supervision Department undertakes a range of activities crucial to ensuring the stability of the financial system, including:
- managing international relations with foreign Supervisory Authorities, International Bodies and Rating Agencies;
- conducting inspections;
- overseeing domestic and international statistical reporting, as well as the Central Credit Register;
- drafting regulations and managing sanction procedures;
- handling authorization processes, analysis, paperwork, and extraordinary procedures.
As of December 31, 2024, the summary data is as follows:
- 12 San Marino authorized entities;
- 51 foreign authorized entities;
- 33 insurance intermediaries (including 3 banks);
- 1 financial promoter;
- 2 securitization servicers.
for a total of No. 96 supervised entities, plus 5 companies in compulsory liquidation and 5 in voluntary liquidation.
In recent years, the regulatory framework for the categories of supervised entities has significantly expanded and become more sophisticated, in line with developments in the European Union, making it necessary to raise the qualitative and quantitative standards of staff. The growing interaction with international markets requires more comprehensive monitoring of foreign counterparties. These processes have a direct impact on the reputation of the banking and financial system, making activities that safeguard the soundness and credibility of the San Marino economy essential.
How do the costs of supervision affect CBSM's budget?
The direct and indirect costs of supervision activities are recovered by passing them on to supervised entities. Since 2021, secretarial fees have also been introduced that private entities must pay whenever they request questions or opinions from the CBSM, typically related to supervisory regulations.