This follows the successful launch of Lynx in August 2021, replacing the Large Value Transfer System (LVTS) that served as Canada's high-value payment system for over 20 years.
The second release of Lynx introduces the ISO 20022 financial messaging standard which allows richer data to travel with each payment. As more financial institutions begin to send and receive ISO-enabled payments, Lynx participants will be able to leverage richer payments data to offer new products and services to their customers. For example, additional data such as purchase order details and invoice reference numbers traveling with each payment will allow for increased automation and the digitisation of manual and paper-based processes currently required to support payment reconciliation and exception handling.
The implementation of the ISO 20022 standard will also simplify cross-border payments as the standard is adopted around the world, and helps align Canadian financial institutions with Swift's global implementation of ISO 20022.
Company officials stated that the introduction of ISO 20022 messaging on the Lynx payment system represents a massive collaborative effort between Payments Canada, their member participants, the Bank of Canada, and their technology partners IBM and Nexi. Payments Canada is proud to bring the benefits of ISO 20022 to Canadians through Lynx at the same time as the global payment community. ISO 20022 is an integral part of their broader payment modernisation initiative and provides a foundation for continued payment innovation in Canada.
A fundamental part of Payments Canada's modernisation initiative was the introduction of a new high-value payment system to support the long-term growth of Canada's economy and payment needs. Lynx facilitates the irrevocable transfer of wire payments between participating financial institutions in Canadian dollars. Lynx is based on the real-time gross settlement (RTGS) model, in which settlement occurs immediately after the clearing of each individual payment resulting in the instant transfer of funds in central bank money from one participant to another. Settlement finality reduces risk for participants and the Bank of Canada and supports the safety and soundness of Canada's financial system.
Lynx is designated by the Bank of Canada as a systemically important payment system under the Payment Clearing and Settlement Act. Lynx is critical to Canada's economy as it processes payments valued at hundreds of billions of dollars every business day. The Lynx high-value payment system will continue to support innovation, enhanced cyber security and resiliency capabilities. Lynx serves as the key mechanism by which the Bank of Canada implements monetary policy.
The successful launch of release one of Lynx included the implementation of a new risk model that complies with Canadian and international risk standards and new technology (application and infrastructure). In the first year of operations, Lynx has cleared and settled over 12 million payments valued at approximately USD 115 trillion. Lynx is owned and operated by Payments Canada and overseen by the Bank of Canada.
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