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Real-time Gross Settlement Systems: Breaking the wall of scalability and high availability

Author

Listed:
  • Mauro Arcese

    (Bank of Italy)

  • Domenico Di Giulio

    (Bank of Italy)

  • Vitangelo Lasorella

    (Bank of Italy)

Abstract

By leveraging the progress of information technology and computer networks, Real Time Gross Settlement systems (RTGS), which first appeared in the early 1990s, have quickly become the standard for the settlement of interbank payments in central bank money. However, the market of retail payments still relies on batch-based netting systems, as the huge volume of retail payments makes the architecture of a typical RTGS impractical in this context. The Eurosystem’s decision to provide a settlement service for instant payments has laid the foundation for the transformation of retail systems into real-time systems. A new design for settlement engines is needed, which should now be capable of settling an extremely high volume of payments in real time, while also operating continuously and exposing low transaction costs. This need has been the main driver for the design of the TIPS (Target Instant Payment Settlement) engine, a distributed, event-driven architecture based on principles of reactive applications and running on Linux/x86 commodity systems for cost efficiency. This paper shows how the traditional design of a mostly centralized, vertically scalable RTGS can be replaced by a distributed, horizontally scalable system, provided that the proper mix of parallel and sequential computation is used.

Suggested Citation

  • Mauro Arcese & Domenico Di Giulio & Vitangelo Lasorella, 2021. "Real-time Gross Settlement Systems: Breaking the wall of scalability and high availability," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 2, Bank of Italy, Directorate General for Markets and Payment System.
    • Handle: RePEc:bdi:wpmisp:mip_002_21
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    File URL: https://www.bancaditalia.it/pubblicazioni/mercati-infrastrutture-e-sistemi-di-pagamento/approfondimenti/2021-002/N.2-MISP.pdf?language_id=1
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    References listed on IDEAS

    as
    1. Massimiliano Renzetti & Serena Bernardini & Giuseppe Marino & Luca Mibelli & Laura Ricciardi & Giovanni Maria Sabelli, 2021. "TIPS - TARGET Instant Payment Settlement The Pan-European Infrastructure for the Settlement of Instant Payments," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 1, Bank of Italy, Directorate General for Markets and Payment System.
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    Cited by:

    1. Massimiliano Renzetti & Andrea Dimartina & Riccardo Mancini & Giovanni Maria Sabelli & Francesco Di Stasio & Carlo Palmers & Faisal Alhijawi & Erol Kaya & Christophe Piccarelle & Stuart Butler & Jwall, 2022. "Cross-Currency Settlement of Instant Payments in a Cross-Platform Context: a Proof of Concept," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 19, Bank of Italy, Directorate General for Markets and Payment System.
    2. Pietro Tiberi, 2021. "The carbon footprint of the Target Instant Payment Settlement (TIPS) system: a comparative analysis with Bitcoin and other infrastructures," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 5, Bank of Italy, Directorate General for Markets and Payment System.
    3. Emanuele Urbinati & Alessia Belsito & Daniele Cani & Angela Caporrini & Marco Capotosto & Simone Folino & Giuseppe Galano & Giancarlo Goretti & Gabriele Marcelli & Pietro Tiberi & Alessia Vita, 2021. "A digital euro: a contribution to the discussion on technical design choices," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 10, Bank of Italy, Directorate General for Markets and Payment System.
    4. Marco Capotosto & Gianluca Caricato & Silvio Orsini & Pietro Tiberi, 2022. "TIPS : A zero-donwtime platform powered by automation," Temi di discussione (Economic working papers) 28, Bank of Italy, Economic Research and International Relations Area.
    5. Massimiliano Renzetti & Serena Bernardini & Giuseppe Marino & Luca Mibelli & Laura Ricciardi & Giovanni Maria Sabelli, 2021. "TIPS - TARGET Instant Payment Settlement The Pan-European Infrastructure for the Settlement of Instant Payments," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 1, Bank of Italy, Directorate General for Markets and Payment System.

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    2. Massimiliano Renzetti & Andrea Dimartina & Riccardo Mancini & Giovanni Maria Sabelli & Francesco Di Stasio & Carlo Palmers & Faisal Alhijawi & Erol Kaya & Christophe Piccarelle & Stuart Butler & Jwall, 2022. "Cross-Currency Settlement of Instant Payments in a Cross-Platform Context: a Proof of Concept," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 19, Bank of Italy, Directorate General for Markets and Payment System.

    More about this item

    Keywords

    TIPS; RTGS; distributed systems;
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