Efficient interbank payment systems are a vital part of the infrastructure of any modern economy. But where such systems are based on end-of-day settlement, there is scope for receiver risk. To eliminate that risk, a number of countries have now decided on settlement arrangements based on real-time gross settlement (RTGS); the initial decision to adopt RTGS in the United Kingdom was taken in 1992. This article explains the reasons behind that decision and describes the main features of the new system, which is due to be implemented before the end of 1995.
The development of a UK real-time gross settlement system