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An Intraday Liquidity Market

In: Payment Systems in the Financial Markets

Author

Listed:
  • Marco Rossi

    (International Monetary Fund)

Abstract

The planned introduction of RTGS systems in Europe is likely to raise a series of policy issues concerning the provision of intraday liquidity. The current operation of the principal large-value net payment systems allows for the creation of large volumes on intraday credit amongst its members. Having previously introduced a number of interim measures to restrict the scale of the credit risks created by the functioning of the system — for instance, limits on credit exposures in CHAPS were introduced in 1992 and similar restrictions operate in CHIPS — central banks thought it necessary to move to a settlement system that eliminated credit risk. Under the proposed RTGS systems, any payment instruction must first be notified to the central bank and will be allowed to proceed only if the paying bank has sufficient funds in its RTGS settlement account held at the central bank. This is, indeed, the case for the new RTGS system in the UK which replaced CHAPS in April 1996.

Suggested Citation

  • Marco Rossi, 1998. "An Intraday Liquidity Market," Palgrave Macmillan Books, in: Payment Systems in the Financial Markets, chapter 6, pages 107-124, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-26374-5_6
    DOI: 10.1007/978-1-349-26374-5_6
    as

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