HONG KONG MONETARY AUTHORITY Annual Report 1996
HONG KONG MONETARY AUTHORITY
ACHIEVEMENTS
REAL TIME GROSS SETTLEMENT SYSTEM LAUNCHED
The new RTGS system was successfully introduced on 9 December. It is one of the most advanced in the Asia Pacific region. Under this system, all licensed banks in Hong Kong open and maintain settlement accounts with the HKMA. The new system is in full compliance with international standards and has greatly enhanced the robustness of the interbank payment system by reducing settlement risk.
Simple and robust system design
The design of the RTGS system is simple and robust. All licensed banks have direct access to the system. Interbank payments settled across the books of the HKMA are final and irrevocable. Banks without sufficient credit balances in their Settlement Accounts will have their payment instructions queued in the system. Alternatively, these banks may sell and repurchase (repo) their Exchange Fund Bills and Notes during the day to obtain interest-free intraday liquidity from the HKMA.
HKMA's roles under the RTGS system
Under the new RTGS system, the HKMA:
- act as settlement institution for all licensed banks in Hong Kong;
- continues to operate the CMU system, which is now fully integrated with the funds transfer system;
- monitors the payment flows very closely and provides liquidity through the intraday repo arrangement to prevent payment gridlocks from occurring in line with the HKMA's role as the lender of last resort; and
- performs a direct role in overseeing the operation and development of Hong Kong's interbank payment system.