MEDIA RELEASE No: 98-08 Date: 16 June 1998 Embargo: For Immediate Release

COMMENCEMENT OF REAL-TIME GROSS SETTLEMENT (RTGS)

On 22 June, the Reserve Bank will commence real-time gross settlement of all payments between Australian banks which are processed across the Reserve Bank Information and Transfer System (RITS).

These payments include all debt securities settlements, the Australian dollar leg of foreign exchange transactions and time-critical payments on behalf of corporate customers. They amount to around $100 billion daily, which is about 90 per cent of total payments among banks.

Under RTGS these payments will be settled as they arise, using credit funds in the paying bank's settlement account at the Reserve Bank. This contrasts with the current practice where final settlement of daily transactions among banks (on a net basis) does not occur until 9.00 a.m. on the next business day.

The introduction of RTGS is a landmark payments system reform which will substantially reduce domestic interbank settlement risk, and bring Australia into line with international best practice; it is also an important step in reducing settlement risk in foreign exchange markets. This represents the successful culmination of a major three-year project involving the Reserve Bank, the banking industry, the Australian Payments Clearing Association Limited and Austraclear Limited.

Enquiries:
Dr John Veale
Head of Payments Policy Department
(02) 9551 8700

Mr Bill Hands
Head of Payments Settlements Department
(02) 9551 8901