The RIX payment system
Similar to central banks in other countries, the Riksbank provides a central payment system in Sweden. Banks and other financial institutions use this system to make payments among themselves. The Swedish payment system is called RIX and banks, clearing organisations, the Swedish National Debt Office and the Riksbank are participants. The RIX system has two settlement services, RIX-RTGS and RIX-INST. RIX-RTGS is for large-value payments and RIX-INST for smaller and instant payments 24 hours a day.
All payments, not made using banknotes and coins, involve money being moved between accounts at one or more banks. When households and companies pay a bill, for example, they instruct the bank to transfer money from their own account to the payee’s account. If the payer and payee have accounts in the same bank, the payment is completed within the bank. If the payee’s account is at another bank, a central payment system is needed to forward payments from one bank to the other. All payments, made both directly between banks and on the instructions of a customer, take place via the accounts held by the banks in RIX-RTGS. The Riksbank thus functions as the banks’ bank and is the nexus of the payment system. As the central bank, the Riksbank can supply money to RIX-RTGS by lending money to banks during the day, allowing payments to be made smoothly.
A payment takes place in several different steps: it is checked, cleared in some cases and settled. The checks ensure that the payer is authorised to make payments and that there are sufficient funds in the payer’s account. Clearing means that the payer’s payments are consolidated before being sent for settlement. The settlement that takes place in the participants’ accounts in RIX-RTGS is the final step in the payment chain and signifies completion of the payment.
Settlement in participants’ accounts in RIX-RTGS takes place in Riksbank money, that is to say national central bank money. Central bank money is the safest way for banks and other financial institutions to make payments between each other as the Swedish state stands surety for the value of the money.
RIX-RTGS is designed to be able to cope with large payments between participants. About SEK 670 billion goes through RIX every day and the average payment sent through system is about SEK 35 million.
How does settlement take place in RIX-RTGS?
Transfers between the accounts held by participants in RIX-RTGS are made electronically and according to the principles of “real time gross settlement”, RTGS. This means that payments are made one by one, and that the funds coming into the accounts become immediately available for other transfers.
There are also functions in RIX-RTGS that enable several payments to be made at the same time by being offset against one another. This increases the efficiency of the system. RIX-RTGS is thus a hybrid system that makes use of both the advantages of gross settlement – that the risks decline – and the liquidity saving made when payments are offset against one another. To promote safety and efficiency in the system, the Riksbank can provide credit during the day, what is known as “intraday credit”, in RIX-RTGS. However, credit is only granted against adequate collateral.
RIX-RTGS is open on weekdays between 07.00 and 18.00 hours. When RIX is closed, no payments are processed and banks have to wait until RIX opens again before payments can be settled. In May 2022, the Riksbank supplemented the existing RIX-RTGS with a new service, RIX-INST, allowing payments to be settled between banks in real time, round-the-clock and all year round in central bank money. The Riksbank has concluded an agreement with the Eurosystem on using the TARGET Instant Payment Settlement (TIPS) platform that enables the settlement of instant payments in Swedish kronor (SEK) in central bank money. Work is currently under way to transfer Swish payments to RIX-INST. This is expected to be completed by the beginning of 2023. Swish will then be the first service to use RIX-INST. More information can be found on the page "New service in RIX for instant payments".