Establishment of Final Real-Time Clearing System (RTGS) Enters Implementation Phase

3.4.2005
 
Establishment of Final Real-Time Clearing System (RTGS) Enters Implementation Phase
 
The Bank of Israel reports that preparations for the implementation of a Real Time Gross Settlement (RTGS) system are continuing apace. The system will make it possible to settle large payments between individuals and firms in the course of a single day, immediately and finally, with no possibility that the transaction will be canceled at a later time. On April 4, 2005, the Bank of Israel will invite bids for the construction of the system, which it will run. Since Israeli firms lack experience in this field, the invitation will be addressed to foreign firms. However, the Bank of Israel will insist that the system be maintained by a domestic branch of the winning bidder or by a domestic subcontractor, and that the hardware be acquired via an Israeli vendor.
The Bank of Israel explains that awareness of the importance of upgrading and improving the stability of the country’s payments systems has been growing in recent years. These systems include the check clearinghouse, the automatic clearinghouse that performs standing orders and direct credits/debits, the Stock Exchange clearinghouse, and, of course, the central-bank systems that perform the final clearing function for all interbank activity in the banks’ accounts with the central bank.
The Bank of Israel, in conjunction with the banking system, has been subjecting Israel’s payments and clearing system to comprehensive reform. The pinnacle of this reform is the establishment of a Real Time Gross Settlement (RTGS) system that will assure rapid and reliable performance of payments and will lower the risks in existing clearinghouses, bring them up to international standards, and enable them to work with the new system. As part of the comprehensive reform, the Bank of Israel is acting to introduce changes in the domestic payments and clearing systems in various respects, such as extending the banking business day to the afternoon and improving the check-clearing process.