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Channelling government securities redemption into VIBER and its effects on payment systems and its participants

Author

Listed:
  • Levente Habány

    (Magyar Nemzeti Bank (central bank of Hungary))

  • Anikó Turján

    (Magyar Nemzeti Bank (central bank of Hungary))

Abstract

Starting from October 2009, redemption of government securities was transferred to the real-time gross settlement system (VIBER) developed for the settlement of time-critical transfers and operated by MNB. This step ensures that the settlement of redemption is performed in the clearing system where the financial performance related to the issue of government securities has been carried out for a long time. Channelling redemption to VIBER has achieved its goal, as it allowed the issuer (the Hungarian state) to use the funds stemming from the issue for the purposes of repayments and manage its liquidity in a simpler and more flexible way. In addition, this change has not caused a significant liquidity shortfall for participants in either of the two payment systems. This resulted in clearly less liquidity demand in the financial settlement processes related to the issue of government securities and redemption upon expiry. Not even a slight disruption was caused by changeover in the payment systems: thanks to proper preparatory work, all the affected system participants changed to the new liquidity procedure without any particular adjustment pressure.

Suggested Citation

  • Levente Habány & Anikó Turján, 2010. "Channelling government securities redemption into VIBER and its effects on payment systems and its participants," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 5(2), pages 22-30, June.
    • Handle: RePEc:mnb:bullet:v:5:y:2010:i:2:p:22-30
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    File URL: http://www.mnb.hu/letoltes/habany-turjan-en.pdf
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    More about this item

    Keywords

    redemption of government securities; State treasury; custodians; real time gross settlement system gridlock resolution; payment systems; liquidity saving mechanism;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing

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