Finance and Financial Management Commons^™

A Proposal For A Decentralized Liquidity Savings Mechanism With Side Payments, Adam Fugal, Rodney Garratt, Zhiling Guo, Dave Hudson

Research Collection School Of Computing and Information Systems

In most countries, the central bank provides the medium to physically settle the smallest payments (cash) and the means to electronically settle the largest payments, which typically are wholesale payments between banks. For the latter purpose the central bank usually operates a system through which banks can settle payments in central bank money. Historically, interbank payments were settled via (end of day) netting systems, but as volumes and values increased central banks became worried about the risks inherent in deferred net settlement systems, so most central banks opted for the implementation of a Real Time Gross Settlement (RTGS) system. With …