What is a rough settlement in real time?

Real -time settlement is a system of transfer of funds between one bank and the other. Unlike some systems, money will change immediately. The "rude" in the name concerns the fact that each transaction is completed individually than to be combined with others. There is also a system to cover all Member States of the European Union. The United States has a rough settlement in real time called Fedwire. The Canadian equivalent, LVTS, is not technically a real -time settlement regime, because the settlement really takes place at the end of each financial day. Rather than any physical asset changing hands, the total balance of the bank simply changes electronically with each transaction. For this reason, most such programs are supervised by the national government to make sure that there is no play.

Such schemes have the advantage of effectively eliminating credit and security risks. The person who receives payment will receive money practically immediately and therefore can easily make sure that Nedogives the appropriate good or service until they get the payment. Once the payment is made within such a system, it cannot be reversed. There is also virtually no security risk, because neither party does not have to withdraw money from the bank, even in a "safe" form, such as a banker's proposal.

Schemes also have advantages for the banks themselves. The main thing is that they can watch their total "cash" levels throughout the day. Because they simply have one character that is constantly and automatically updated, there is no need to calculate the running sum.

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scheme of rough settlement in real time differs from the other main system known as network systems. We will look at all payments that move back and forth between the banks, and then one bank that pays the second amount of "settling" at the end of the day. Such schemes can be cheaper because it is less administration. Disadvantage jE, depending on the participating banks, customers can find out that they cannot immediately transfer money even if they use telephone or internet banking services. This can be particularly frustrating if the combination of banks means that the money will leave the account of one customer immediately, but will not reach the other customer's account by the end of the day.