The Design of RTGS Systems: Concluding Remarks: Part II: Real-Time Gross Settlement Systems
The Design of RTGS Systems: Concluding Remarks: Part II: Real-Time Gross Settlement Systems
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As the above analysis has shown, the concept of RTGS is straightforward but
the systems themselves can take many different forms. These differences partly
reflect the fact that circumstances vary from country to country, so that
arrangements that are appropriate for one country may not be relevant for
another. In many cases a pragmatic approach has been adopted to certain
design features. Finally, as mentioned earlier, RTGS systems are on the whole a
relatively recent concept and thus there has often been little operational
experience on which to base comparisons between different options.
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Author Given these factors, while it may be difficult to draw any universally applicable
Committees at the conclusions about the merits of particular features of RTGS systems, it might be
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useful to set out the key criteria that are likely to be used when choosing
Real-Time Gross between different options. Following the presentation of Part II, RTGS systems
Settlement can be categorised according to three main considerations, namely (a) whether
Systems
Part II: Real-
the central bank provides intraday credit to participants in the system and, if so,
Time Gross on what terms, (b) the message flow structure and (c) the facilities, if any,
Settlement available for queuing. Although there are many other ways in which systems
Syst...
Overview of
differ, these three areas seem to capture the most important aspects.
RTGS systems
Components, Whether intraday credit is provided or not may depend partly on whether
measures and interbank funds transfer systems are seen simply as mechanisms that enable
management of
l...
settlement to take place, in which case it may be decided that no specific
Message flow liquidity facilities will be provided, or whether the provision of intraday liquidity is
structures seen as being a straightforward extension of a central bank's existing role as a
Queuing
arrangements
provider of liquidity to the banking system. The decision to extend intraday credit
The design of may also reflect a view that intraday credit is necessary to enable the system to
RTGS systems: function smoothly. Where credit is provided, there are variations in the terms set
concluding r...
(e.g. whether the credit has to be collateralised and what fee or interest rate, if
any, is charged), reflecting a number of important considerations. For example,
central banks differ in the way they prefer to manage any risks associated with
providing credit. Moreover, in some systems a key consideration may be a
desire to keep the cost to banks of obtaining intraday liquidity as low as
possible, while in other systems this may be less critical or a positive cost may
be seen as a useful way of encouraging banks to economise on their use of any
central bank liquidity facility.
As far as the message flow structure is concerned, the key choice is often
between the Vshaped and Yshaped structures, and an important consideration
here is the role of the central bank relative to the private sector in the daytoday
operation of the system: for some, the attraction of the Y architecture is that it
enables a distinction to be drawn between the central bank's core role as
settlement agent and the rest of the system processing, which can be a
separate, private sector function. Whether this is an issue typically depends in
part on the nature of the arrangements in place before RTGS was introduced
(i.e. the extent to which the central bank was involved in the daytoday operation
of the previous nonRTGS system) and thus on what has come to be regarded
as normal or desirable in the market concerned. Other relevant factors may
include potential risks associated with the message flow (which is why the T‐
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those cases where the new RTGS system is being adapted from a previous
system and thus where particular architectures, such as the Lshaped structure,
may be used).
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