Real-time gross settlement

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Template:Short description Script error: No such module "other uses". Real-time gross settlement (RTGS) systems are specialist funds transfer systems where the transfer of money or securities[1] takes place from one bank to any other bank on a "real-time" and on a "gross" basis to avoid settlement risk. Settlement in "real time" means a payment transaction is not subjected to any waiting period, with transactions being settled as soon as they are processed. However, real time does not necessarily mean immediately or instantly and can be subject to processing (e.g., wire transfers via FedWire are real time but can take hours in some cases while the issuing or reviewing bank’s wire room reviews or processes it, if necessary). "Gross settlement" means the transaction is settled on a one-to-one basis, without bundling or netting with any other transaction. "Settlement" means that once processed, payments are final and irrevocable.

History

As of 1985, three central banks implemented RTGS systems, while by the end of 2005, RTGS systems had been implemented by 90 central banks.[2]

The first system that had the attributes of an RTGS system was the US Fedwire system which was launched in 1970. This was based on a previous method of transferring funds electronically between US federal reserve banks via telegraph. The United Kingdom and France both independently developed RTGS type systems in 1984. The UK system was developed by the Bankers' Clearing House in February 1984 and was called CHAPS. The French system was called SAGITTAIRE. A number of other developed countries launched systems over the next few years. These systems were diverse in operation and technology, being country-specific as they were usually based upon previous processes and procedures used in each country.

In the 1990s international finance organizations emphasized the importance of large-value funds transfer systems which banks use to settle interbank transfers for their own account as well as for their customers as a key part of a country's financial market infrastructure. By 1997 a number of countries, inside as well as outside the Group of Ten, had introduced real-time gross settlement systems for large-value funds transfers. Nearly all G-10 countries had plans to have RTGS systems in operation in the course of 1997 and many other countries were also considering introducing such systems.[3]

Operation

RTGS systems are usually operated by a country's central bank as it is seen as critical infrastructure for a country's economy. Economists believe that an efficient national payment system reduces the cost of exchanging goods and services, and is indispensable to the functioning of the interbank, money, and capital markets. A weak payment system may severely drag on the stability and developmental capacity of a national economy; its failures can result in inefficient use of financial resources, inequitable risk-sharing among agents, actual losses for participants, and loss of confidence in the financial system and in the very use of money.[4]

RTGS system does not require any physical exchange of money; the central bank makes adjustments in the electronic accounts of Bank A and Bank B, reducing the balance in Bank A’s account by the amount in question and increasing the balance of Bank B’s account by the same amount. The RTGS system is suited for low-volume, high-value transactions. It lowers settlement risk, besides giving an accurate picture of an institution’s account at any point in time. The objective of RTGS systems by central banks throughout the world is to minimize risk in high-value electronic payment settlement systems. In an RTGS system, transactions are settled across accounts held at a central bank on a continuous gross basis. The settlement is immediate, final, and irrevocable. Credit risks due to settlement lags are eliminated. The best RTGS national payment systems cover up to 95% of high-value transactions within the national monetary market.

RTGS systems are an alternative to systems of settling transactions at the end of the day, also known as the net settlement system, such as the BACS system in the United Kingdom. In a net settlement system, all the inter-institution transactions during the day are accumulated, and at the end of the day, the central bank adjusts the accounts of the institutions by the net amounts of these transactions.[5]

The World Bank has been paying increasing attention to payment system development as a key component of the financial infrastructure of a country and has provided various forms of assistance to over 100 countries. Most of the RTGS systems in place are secure and have been designed around international standards and best practices.[6]

There are several reasons for central banks to adopt RTGS. First, a decision to adopt is influenced by competitive pressure from the global financial markets. Second, it is more beneficial to adopt an RTGS system for the central bank when this allows access to a broad system of other countries' RTGS systems. Third, it is very likely that the knowledge acquired through experiences with RTGS systems spills over to other central banks and helps them make their adoption decision. Fourth, central banks do not necessarily have to install and develop RTGS themselves. The possibility of sharing development with providers that have built RTGS systems in more than one country (CGI of UK holding the IP, CMA Small System of Sweden, JV Perago of South Africa, SIA S.p.A. of Italy and Montran of USA) has presumably lowered the cost and hence made it feasible for many countries to adopt.[7]

Existing systems

File:Large value payment systems.jpg
World map with main systems used for large-value payments

Below is a listing of countries and their RTGS systems:

Country System
Template:Country data African Union PAPSS (Pan-African Payment and Settlement System)[8]
File:Flag of Angola.svg Angola SPTR (Template:Langx; Real-time Payment System)
File:Flag of Argentina.svg Argentina MEP (Template:Langx; Electronic Means of Payment)[9]
File:Flag of Azerbaijan.svg Azerbaijan AZIPS (Azerbaijan Interbank Payment System)[10]
File:Flag of Australia (converted).svg Australia RITS (Reserve Bank Information and Transfer System)
File:Flag of Bahrain.svg Bahrain RTGS (Real Time Gross Settlement System)[11]
File:Flag of Bangladesh.svg Bangladesh BD-RTGS (Bangladesh Bank Payment Service Division)
File:Flag of Barbados.svg Barbados CBRTGS (Central Bank Real Time Gross Settlement System)[12]
File:Flag of Bosnia and Herzegovina.svg Bosnia and Herzegovina RTGS
File:Flag of Belarus.svg Belarus BISS (Belarus Interbank Settlement System)[13]
File:Flag of Bulgaria.svg Bulgaria RINGS (Real-time Interbank Gross Settlement)
File:Flag of Brazil.svg Brazil STR (Template:Langx; Reserves Transfer System)
File:Flag of Canada (Pantone).svg Canada Lynx [14]
File:Flag of the People's Republic of China.svg China CIPS (Cross-Border Interbank Payment System) [15]
File:Flag of Chile.svg Chile LBTR/CAS (Template:Langx; Real-time Gross Settlement)
File:Flag of Costa Rica.svg Costa Rica TEF (Template:Langx; Electronic Funds Transfer) [16]
File:Flag of the Czech Republic.svg Czech Republic CERTIS (Czech Express Real Time Interbank Gross Settlement System)
File:Flag of Denmark.svg Denmark KRONOS2
File:Flag of the Dominican Republic.svg Dominican Republic LBTR (Template:Langx; Gross Settlement in Real Time)[17]
File:Flag of Egypt.svg Egypt RTGS[18]
Template:Flagicon Eurozone T2[19]
File:Flag of Fiji.svg Fiji FIJICLEAR[20]
File:Flag of Hong Kong.svg Hong Kong CHATS (Clearing House Automated Transfer System)
File:Flag of Hungary.svg Hungary VIBER (Template:Langx; Real-time Gross Settlement System)
Template:Country data Georgia GPSS (Georgian Payment and Securities System)[21]
File:Flag of India.svg India RTGS[22]
File:Flag of Indonesia.svg Indonesia BI-RTGS (Bank Indonesia Real Time Gross Settlement Sistem)
File:Flag of Iran.svg Iran SATNA (سامانه تسویه ناخالص آنی, Real-Time Gross Settlement System)
File:Flag of Iraq.svg Iraq RTGS (Real Time Gross Settlement System)[23]
File:Flag of Israel.svg Israel Zahav (Template:Langx; Zahav Real-time Credits and Transfers)[24]
File:Flag of Japan.svg Japan BOJ-NET (Bank of Japan Financial Network System)[25]
File:Flag of Jordan.svg Jordan RTGS-J[26]
File:Flag of Kenya.svg Kenya KEPSS (Kenya Electronic Payment and Settlement System)[27]
File:Flag of Korea (1899).svg Korea BOK-WIRE+ (The Bank of Korea Financial Wire Network, 한은금융망)
File:Flag of Kuwait.svg Kuwait KASSIP (Kuwait's Automated Settlement System for Inter-Participant Payments)
File:Flag of Lebanon.svg Lebanon BDL-RTGS (Banque Du Liban – Real Time Gross Settlement)[28]
File:Flag of Macau.svg Macao RTGS [29]
File:Flag of Malawi.svg Malawi MITASS (Malawi Interbank Settlement System)
File:Flag of Malaysia.svg Malaysia RENTAS (Real Time Electronic Transfer of Funds and Securities)
File:Flag of Mauritius.svg Mauritius MACSS (Mauritius Automated Clearing and Settlement System)[30]
File:Flag of Mexico.svg Mexico SPEI (Template:Langx; Interbank Electronic Payment System)[31]
File:Flag of Morocco.svg Morocco SRBM (Système de règlement brut du Maroc; Moroccan Gross Settlement System)[32]
File:Flag of Namibia.svg Namibia NISS (Namibia Interbank Settlement System)[33]
File:Flag of New Zealand.svg New Zealand ESAS (Exchange Settlement Account System)
File:Flag of Nigeria.svg Nigeria CIFTS (CBN Inter-Bank Funds Transfer System)
Template:Country data North Macedonia MIPS (Macedonian Interbank Payment System)[34]
File:Flag of Pakistan.svg Pakistan RTGS (Real Time Gross Settlement System)[35]
File:Flag of Paraguay.svg Paraguay LBTR (Template:Langx; Gross Settlement in Real Time)
File:Flag of Peru.svg Peru LBTR (Template:Langx; Gross Settlement in Real Time)
File:Flag of the Philippines.svg Philippines RTGS PS (Peso Real-Time Gross Settlement Payment System), also known as PhilPaSSplus[36]
File:Flag of Poland.svg Poland SORBNET3[37]
File:Flag of Qatar.svg Qatar QPS (Qatar Payment System)[38]
File:Flag of Russia.svg Russia BESP System (Banking Electronic Speed Payment System)[39]
File:Flag of Romania.svg Romania ReGIS[40]
File:Flag of Saudi Arabia.svg Saudi Arabia SARIE (Saudi Arabian Riyal Interbank Express)[41]
File:Flag of Singapore.svg Singapore MEPS+ (MAS Electronic Payment System Plus)[42]
File:Flag of South Africa.svg South Africa SAMOS (The South African Multiple Option Settlement)[43]
File:Flag of Sri Lanka.svg Sri Lanka LankaSettle (RTGS/SSSS)[44]
File:Flag of Sweden.svg Sweden RIX (Template:Langx)[45]
File:Flag of Switzerland (Pantone).svg  Switzerland SIC (Swiss Interbank Clearing)[46]
File:Flag of the Republic of China.svg Taiwan CIFS (CBC Interbank Funds Transfer System)[47]
File:Flag of Tunisia.svg Tunisia Système de Virements de Gros Montant Tunisien (SGMT) [48]
File:Flag of Tanzania.svg Tanzania TISS (Tanzania Interbank Settlement System)[49]
File:Flag of Thailand.svg Thailand BAHTNET (Bank of Thailand Automated High Value Transfer Network)[50]
File:Flag of Turkey.svg Turkey EFT (Electronic Fund Transfer)[51]
File:Flag of Ukraine.svg Ukraine SEP (System of Electronic Payments of the National Bank of Ukraine)[52]
File:Flag of the United Arab Emirates.svg United Arab Emirates UAEFTS (UAE Funds Transfer System)[53]
File:Flag of the United Kingdom.svg United Kingdom CHAPS (Clearing House Automated Payment System)[54]
File:Flag of the United States.svg United States Fedwire
File:Flag of Uganda.svg Uganda UNIS (Uganda National Interbank Settlement)[55]
File:Flag of Vietnam.svg Vietnam IBPS[56]
File:Flag of Zambia.svg Zambia ZIPSS (Zambian Interbank Payment and Settlement System)[57]
File:Flag of Zimbabwe.svg Zimbabwe ZETSS (Zimbabwe Electronic Transfer and Settlement System)[58]

Template:Notelist

In 2010, the World Bank published a report on payment systems worldwide, which investigated these countries' usage of real-time gross settlement systems for large-value payments.[59] [60]

See also

References

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  1. ↑ Script error: No such module "Citation/CS1".
  2. ↑ Morten Bech, Bart Hobijn, "Technology Diffusion within Central Banking: The Case of Real-Time Gross Settlement", Staff Report NJ. 260, Federal Reserve Bank of New York, Working Paper, September 2007, p. 2
  3. ↑ Script error: No such module "citation/CS1".
  4. ↑ Biago Bossone and Massimo Casino, "The Oversight of the Payment Systems: A Framework for the Development and Governance of Payment Systems in Emerging Economies"The World Bank, July 2001, p.7
  5. ↑ Script error: No such module "citation/CS1".
  6. ↑ Massimo Casino and Jose Antonio Garcia, "Measuring Payment System Development", The World Bank, 2008
  7. ↑ Morten Bech, Bart Hobijn, " Technology Diffusion within Central Banking: The Case of Real-Time Gross Settlement", Staff Report NJ. 260, Federal Reserve Bank of New York, Working Paper, September 2006, p. 16–17
  8. ↑ Script error: No such module "citation/CS1".
  9. ↑ Script error: No such module "citation/CS1".
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  11. ↑ Script error: No such module "citation/CS1".
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  20. ↑ Script error: No such module "citation/CS1".
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  22. ↑ Script error: No such module "citation/CS1".
  23. ↑ Script error: No such module "citation/CS1".
  24. ↑ Script error: No such module "citation/CS1".
  25. ↑ Script error: No such module "citation/CS1".
  26. ↑ http://www.cbj.gov.jo/pages.php?menu_id=128/ Script error: No such module "Unsubst".
  27. ↑ Script error: No such module "citation/CS1".
  28. ↑ Script error: No such module "citation/CS1".
  29. ↑ Script error: No such module "citation/CS1".
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  32. ↑ Script error: No such module "citation/CS1".
  33. ↑ Script error: No such module "citation/CS1".
  34. ↑ Script error: No such module "citation/CS1".
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  38. ↑ Script error: No such module "citation/CS1".
  39. ↑ Script error: No such module "citation/CS1".
  40. ↑ Script error: No such module "citation/CS1".
  41. ↑ Script error: No such module "citation/CS1".
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  44. ↑ Script error: No such module "citation/CS1".
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  48. ↑ Script error: No such module "citation/CS1".
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  55. ↑ Script error: No such module "citation/CS1".
  56. ↑ Script error: No such module "citation/CS1".
  57. ↑ Script error: No such module "citation/CS1".
  58. ↑ Script error: No such module "citation/CS1".
  59. ↑ Script error: No such module "citation/CS1".
  60. ↑ Script error: No such module "citation/CS1".

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