Real-time gross settlement

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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. 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. "Gross settlement" means the transaction is settled on one-to-one basis without bundling or netting with any other transaction. "Settlement" means that once processed, payments are final and irrevocable.

RTGS systems are typically used for high-value transactions that require and receive immediate clearing. In some countries the RTGS systems may be the only way to get same day cleared funds and so may be used when payments need to be settled urgently. However, most regular payments would not use a RTGS system, but instead would use a national payment system or automated clearing house that allows participants to batch and net payments. RTGS payments typically incur higher transaction costs and usually operated by a country's central bank.


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

The first systems that had the attributes of a 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 emphasised 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 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]


RTGS systems are usually operated by a country's central bank as it is seen as a 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 of 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. Settlement is immediate, final and irrevocable. Credit risks due to settlement lags are eliminated. The best RTGS national payment system 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.

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.[5]

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 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, 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.[6]

Existing systems[edit]

Below is a listing of countries and their RTGS systems:

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. [20] World map with main system(s) used for large value payments

See also[edit]


  1. ^ Committee on Payment and Settlement Systems of the central banks of the Group of Ten countries (March 1997). "Real-Time Gross Settlement Systems" (PDF). Bank for International Settlements: 14. Archived (PDF) from the original on 2010-10-20.
  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. ^ Committee on Payment and Settlement Systems of the central banks of the Group of Ten countries (March 5, 1997). "Real-time gross settlement systems" (PDF). BIS.
  4. ^ Biago Bossone and Massimo Cirasino, "The Oversight of the Payment Systems: A Framework for the Development and Governanace of Payment Systems in Emerging Economies"The World Bank, July 2001, p.7
  5. ^ Massimo Cirasino and Jose Antonio Garcia, "Measuring Payment System Development", The World Bank, 2008
  6. ^ 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
  7. ^ "Платежная система Республики Беларусь - Национальный банк Республики Беларусь". Archived from the original on 10 October 2017. Retrieved 6 May 2018.
  8. ^ "China's 'Super Online Banking System' Launches on Monday". Business China. August 30, 2010. Archived from the original on October 10, 2017. Retrieved 2017-05-03.
  9. ^ "Hsvp - HNB". Archived from the original on 3 November 2017. Retrieved 6 May 2018.
  10. ^ The RTGS System Archived 2017-02-23 at the Wayback Machine Reserve Bank of India website
  11. ^ "Central Bank of Iraq website". Archived from the original on 2016-03-04. Retrieved 2017-05-03.
  12. ^ "Central Bank of Israel website". Archived from the original on 2017-09-19. Retrieved 2017-10-26.
  13. ^ Bank of Japan (2003). "Payment systems in Japan". Bank of Japan. Archived from the original on 2017-05-06. Retrieved 2017-05-03.
  14. ^ "Central Bank of Lebanon website". Archived from the original on 2017-04-27. Retrieved 2017-05-03.
  15. ^ "National Bank of Macedonia website". Archived from the original on 2017-12-01. Retrieved 2017-12-01.
  16. ^ "Mauritius Automated Clearing and Settlement System". Bank of Mauritius. Retrieved August 18, 2018.
  17. ^ "Banxico's SPEI". Banco de Mexico. Archived from the original on 2012-12-17. Retrieved 2017-05-03.
  18. ^ "State Bank of Pakistan". Archived from the original on 2017-11-01. Retrieved 2017-10-21.
  19. ^ "Bank of Uganda". Archived from the original on 10 October 2017. Retrieved 6 May 2018.
  20. ^ "PAYMENT SYSTEMS WORLDWIDE: A SNAPSHOT - Outcomes of the Global Payment Systems Survey 2010" (PDF).