Does SIC need a heart pacemaker?
AbstractReal-time gross settlement (RTGS) systems effect final settlement of payments continuously and on an individual basis. This generates a trade-off between liquidity needs and settlement delay. Against the background of reconstruction discussions, the paper analyses whether more advanced algorithms reduce liquidity needs and settlement delay if applied to the Swiss Interbank Clearing (SIC) system. Simulations run with the BoF-PSS2 simulator show that expected reductions in liquidity needs and settlement delay are modest and should carefully be evaluated against costs. More advanced settlement algorithms improve settlement efficiency only if payment release behaviour is highly aligned.
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Bibliographic InfoPaper provided by Swiss National Bank in its series Working Papers with number 2013-10.
Length: 41 pages
Date of creation: 2013
Date of revision:
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More information through EDIRC
payment system; simulation; payment splitting; liquidity-saving mechanisms;
Find related papers by JEL classification:
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
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