What restrictions apply to funds in a central bank settlement account for a payment service provider?

In a central bank settlement account for a payment service provider, the primary function is to facilitate the settlement of payments and manage liquidity rather than to engage in various investment activities. This means that the funds in these accounts are typically restricted in their use. Specifically, they cannot be utilized to fulfill other obligations beyond payment settlement, thereby ensuring that the funds are readily available and liquid for transaction purposes. This restriction is crucial for maintaining the integrity of the payment system and ensuring that payment service providers can meet their settlement requirements efficiently.

Maintaining a strict delineation of how these funds can be used helps safeguard the stability of financial transactions, allowing for reliable and secure transfers within the payment networks.