ESSENTIAL CONCEPTS

Real-time Gross Settlement System

Presented by Mr. KY Soklay, MIM, MSc-IT, PRINCE2®

Payment Systems Support Division, IT Department
4th August 2020
Contents
1. Real-Time Gross-Settlement System?
2. Basic vs Hybrid
3. Liquidity Optimization and Saving
4. Gridlock
5. Other country practices

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What is Real-Time Gross-Settlement
System (RTGS) ?

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What is Real-Time Gross-Settlement
System (RTGS)

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Traditional image of two tier high-value and
low-value payment and settlement system

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Demand for fast payments: to what extent the
division of low and high value important?

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As of 1985, three central banks[which?] had 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 a RTGS system was the US
Fedwiresystem 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. (Wiki)

However, there is a problem that settlement liquidity

need much more than DNS. The late 1990s, hybrid
settlement system started to be introduced in Canada
and France (1999), Germany (2001), Italy (2003)
Singapore (2006) EU (2007), Japan (2008), Korea (2009)
and son on. It addressed both credit risk elimination and
saving settlement liquidity. (Ahn, 2017)

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Basic vs Hybrid

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Liquidity Saving and Optimization

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Gridlock

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Other country practice

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 Thank You for Attention
Bibliography
 BIS (1997). Real-time gross settlement system.
 BIS (2005). New developments in large-value payment
systems
 Ahn, Y. (2017). Explanation of hybrid system in LVPS: Using the example of BOK-Wire+
 Yamadera, S. (2019). Overview of Central Bank RTGS (Slide deck).
 Zams, B. M. (2019). Bank Indonesia Realtime Gross Settlement System (Slide deck)
 World Bank (2009). The evolution of real-time gross settlement system.
 https://en.wikipedia.org/wiki/Real-time_gross_settlement