Real Time Gross Settlement
Real time gross settlement systems (RTGS) are funds transfer systems where transfer of money or securities[1] takes place from one bank to another on a "real time" and on "gross" basis. Settlement in "real time" means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. "Gross settlement" means the transaction is settled on one to one basis without bunching or netting with any other transaction. Once processed, payments are final and irrevocable.
[edit] Existing systems
Below is a listing of countries and their RTGS systems:
- Albania - AECH, RTGS
- Australia - RITS (Reserve Bank Information and Transfer System)
- Bosnia and Herzegovina - RTGS
- Bulgaria - RINGS (Real-time INterbank Gross-settlement System)
- Brazil - STR (Sistema de Transferência de Reservas)
- Canada - LVTS (Large Value Transfer System) (This is actually an RTGS Equivalent system. Final settlement happens in the evening.)
- China - China National Advanced Payment System ("CNAPS") (also called "Super Online Banking System)[2]
- Chile - LBTR/CAS (Spanish: Liquidación Bruta en Tiempo Real)
- Croatia - HSVP (Croatian: Hrvatski sustav velikih plaćanja)[3]
- Czech Republic - CERTIS (Czech Express Real Time Interbank Gross Settlement System)
- Hong Kong - Clearing House Automated Transfer System (CHATS)
- Hungary - VIBER (Hungarian: Valós Idejű Bruttó Elszámolási Rendszer)
- India - RTGS[4]
- Indonesia - Sistem Bank Indonesia Real Time Gross Settlement (BI-RTGS)
- Iran - SATNA (سامانه تسویه ناخالص آنی , Real-Time Gross Settlement System)
- Israel - Zahav (Credit and Transfers in Real Time)[5]
- Japan - BOJ-NET (Bank of Japan Financial Network System)[6]
- Kenya - Kenya Electronic Payment and Settlement System (KEPSS)
- Kuwait - KASSIP (Kuwait's Automated Settlement System for Inter-Participant Payments)
- Macedonia - MIPS (Macedonian Interbank Payment System)[7]
- Malaysia - RENTAS (Real Time Electronic Transfer of Funds and Securities)
- Mexico - SPEI (Spanish: Sistema de Pagos Electrónicos Interbancarios) [8]
- New Zealand - ESAS (Exchange Settlement Account System)
- Nigeria - CIFTS (CBN Inter-Bank Funds Transfer System)
- Pakistan - RTGS
- Peru - LBTR (Spanish: Liquidación Bruta en Tiempo Real)
- Philippines - PhilPaSS [3]
- Poland - SORB[4]
- Russia - BESP system (Banking Electronic Speed Payment System)[5]
- Romania - ReGIS system [6]
- Saudi Arabia - (Saudi Arabian Riyal Interbank Express) SARIE [7]
- Singapore - MEPS+ (MAS Electronic Payment System Plus)
- South Africa - SAMOS (The South African Multiple Option Settlement) [8]
- Switzerland - SIC (Swiss Interbank Clearing) [9]
- Taiwan - CIFS (CBC Interbank Funds Transfer System) [10]
- Thailand - BAHTNET (Bank of Thailand Automated High value Transfer Network)
- Turkey - EFT (Electronic Fund Transfer)
- United Kingdom - CHAPS (Clearing House Automated Payment System)
- United States - Fedwire
RTGS systems covering multiple countries:
- TARGET resp. TARGET2 (Trans-European Automated Real-time Gross Settlement Express Transfer System) in 26 countries of the European Union
TARGET2 is the Real Time Gross Settlement system for the Euro currency, and is offered by the Eurosystem, which comprises the European Central Bank and the National Central Banks of those countries that have adopted the Euro currency. The Eurosystem and the European System of Central Banks will co-exist as long as there are EU Member States outside the Euro area.
TARGET2 is used for the settlement of central bank operations, large-value Euro interbank transfers as well as other euro payments. TARGET 2 provides real-time financial transfers, debt settlement at central banks which is immediate and irreversible.
[edit] Mechanism
This "electronic" payment system is normally maintained or controlled by the Central Bank of a country. There is no physical exchange of money; the Central Bank makes adjustments in the electronic accounts of Bank A and Bank B, reducing the amount in Bank A's account by $1000 and increasing the amount of Bank B's account by the same.
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 of time.
Such systems are an alternative to systems of settling transactions at the end of the day, also known as the net settlement system such as BACS. In the net settlement system, all the inter-institution transactions during the day are accumulated. At the end of the day, the accounts of the institutions are adjusted. Extending the example above, say another person deposits a check drawn on Bank B in Bank A for $500. At the end of the day, Bank A will have to "electronically" pay Bank B only $500 ($1000 - $500).
The implementation of RTGS systems by Central Banks throughout the world is driven by the goal 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. Settlement is immediate, final and irrevocable. Credit risks due to settlement lags are eliminated.
RTGS does not require core banking to be implemented across participating banks, since transactions are direct, with no central processing or clearing operations. Any RTGS employs two sets of queues: one for testing outgoing funds availability on a chronological FIFO basis with the option of prioritizing specific inquiries, while the other queue is for processing debit/credit requests received from the central bank's Integrated Accounting System.
[edit] References
- ^ Committee on Payment and Settlement Systems of the central banks of the Group of Ten countries (March 1997). Real-Time Gross Settlement Systems. Bank for International Settlements. p. 14. http://www.bis.org/publ/cpss22.pdf.
- ^ "China's 'Super Online Banking System' Launches on Monday". Business China. August 30, 2010. http://en.21cbh.com/HTML/2010-8-30/1MMDAwMDE5NDg1MA.html. Retrieved September 3, 2010.
- ^ http://www.hnb.hr/platni-promet/medubankovni-platni-statistika/hsvp/h-sustav-velikih-placanja.htm
- ^ The RTGS System Reserve Bank of India website
- ^ The Zahav System Bank of Israel website
- ^ Bank of Japan (2003). Payment systems in Japan. Bank of Japan. http://www.boj.or.jp/en/type/release/zuiji/kako03/set0305a.pdf. Retrieved Jun.17,2010.
- ^ [1] National Bank of Macedonia website
- ^ [2] - Banxico's SPEI