Settlement risk

Norges Bank. Financial Stability | May 1, 2000| | Copyright

Key concepts

Netting: Many transactions are netted, and each bank's net position is calculated. Positions can be calculated between two banks (bilateral) or between several banks (multilateral). Net settlement: Settlement of net positions in a settlement bank.

Gross settlement: Transactions are settled individually.

Real time gross settlement (RTGS): In Norges Bank's settlement system (NBO), settlement is instantaneous if the bank has the given amount available. If the bank lacks cover, the transaction is placed in a queue until cover is available.

4.1 Clearing and settlement systems and ...

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