The Payment System - RIX
Similar to central banks in other countries, the Riksbank provides a central system for large value payments 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.
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 directly between banks and on the instructions of a customer, take place via the accounts held by the banks in the RIX system. 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 the RIX system 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, in some cases cleared and then settled. The checks ensure that the payer is authorised to make payments and that there are sufficient funds in their 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 is the final step in the payment chain and signifies completion of the payment.
The RIX system is designed to be able to cope with large value payments between participants. About SEK 670 billion goes through RIX every day and the average payment sent into the system is about SEK 35 million.
How does settlement take place in RIX?
Transfers between the accounts held by participants in RIX 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 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 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. However, credit is only granted against adequate collateral.