Real-Time Gross Settlement (RTGS) processes and settles each payment individually and immediately in central bank money.
The mechanism does not combine payments through netting. Therefore, each successful transaction receives immediate and final settlement.
RTGS forms the payment-processing component of T2, a TARGET Service. Meanwhile, Central Liquidity Management provides and manages the required liquidity.
Before settlement, the system validates the instruction and checks the available balance. If funds are insufficient, it may queue or reject the payment according to defined rules.
Priority settings allow participants to process urgent transactions first. Moreover, strict schedules, cut-off times, and exception procedures support predictable operations.
Individual settlement reduces the build-up of financial exposure. In addition, central bank money removes credit risk between participants.
Immediate and final settlement supports secure payments, transparent balances, effective risk control, and financial stability.
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