Real Time Gross Settlement

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Real Time Gross Settlement ( RTGS ) denotes a real-time ( engl. real time) gross settlement system or real-time gross settlement system for the settlement of transactions between financial institutions, particularly banks. Any transactions are already being processed at the time of their creation and settled immediately. RTGS payments are so-called "push" payments initiated by the payer ( " bumped" ) are.

In the securities business an RTGS system is defined as a gross -gross system in which takes place either on the securities still on the money side netting ( offsetting of counterclaims ).

RTGS systems are used in most countries for so-called large-value payments, so for transactions of high volume (value). In some countries such as Switzerland, the Czech Republic and Turkey, the respective RTGS systems also handle mass payments ( micro payments ) from direct debits and card business.

Since the clearing and settlement in an RTGS system immediately, final and irrevocable takes place, market participants have full security on the received funds. This credit risk is virtually eliminated by delays in processing (settlement risks). The introduction of RTGS systems worldwide is mainly promoted by the central banks, which ensure the stability of the financial system. A failure in the payment processing is a systemic risk, which cause widespread liquidity or credit problems and can thus jeopardize the stability of the financial system, or even the whole economy.

TARGET2 at which 26 of the 27 central banks of the European Union in the framework of the European System of Central Banks ( ESCB ) are connected, is the largest RTGS system in Europe.

Fedwire is the RTGS system of the Federal Reserve Bank, the Central Bank of the United States, for payment processing in U.S. dollars.

• Cashless payments