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Does SIC need a heart pacemaker?

Author

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  • Dr. Robert Oleschak
  • Dr. Thomas Nellen

Abstract

Real-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.

Suggested Citation

  • Dr. Robert Oleschak & Dr. Thomas Nellen, 2013. "Does SIC need a heart pacemaker?," Working Papers 2013-10, Swiss National Bank.
    • Handle: RePEc:snb:snbwpa:2013-10
    as

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    File URL: https://www.snb.ch/en/publications/research/working-papers/2013/working_paper_2013_10
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    References listed on IDEAS

    as
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    6. Guntzer, Michael M. & Jungnickel, Dieter & Leclerc, Matthias, 1998. "Efficient algorithms for the clearing of interbank payments," European Journal of Operational Research, Elsevier, vol. 106(1), pages 212-219, April.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    payment system; simulation; payment splitting; liquidity-saving mechanisms;
    All these keywords.

    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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