Study of the Riksbank’s future settlement service
During 2021, the Riksbank carried out a preliminary study on the functioning of its future settlement service for large-value payments. As part of the preliminary study, the Riksbank consulted with market participants. Based on the results of the preliminary study, the Executive board has decided that the direction for the Riksbank’s future system for settlement of large-value payments is to use the Eurosystem’s T2 platform.
The current settlement system for large-value payments, the Riksbank’s RIX system, was launched in 2009 and has functioned well. Since then, new technologies and services have emerged, which compete to an increasing extent with the traditional payment systems, both nationally and internationally. The Riksbank’s intention is to continue offering the market a modern, cost-effective and secure system for the settlement of payments in Swedish krona. The Executive Board has therefore decided that the direction for the Riksbank’s future system for settlement of large-value payments is to use the Eurosystem’s T2 platform.
Increasing internationalisation, where banks and others are active on several markets, increases the requirements for harmonisation and thus also the use of common standards. Additionally, there is a need for payment systems to manage increasingly large amounts of data and to be able to interact with other systems. Another challenge is the operational risks that arise when the financial infrastructure serves an increasing number of actors, at an increasingly fast pace and greater distance. This development leads to greater demands with regard to security (especially cyber security) and robustness in the systems, to ensure they are resilient to attacks and maintain a high degree of continuity. Additionally, the Riksbank needs to manage the requirements of the market and society regarding cost-effective and safe system solutions.
Before the Riksbank can take a decision on entering into contractual negotiations with the Eurosystem, a more in-depth analysis is needed of a number of questions related to the Eurosystem’s T2 platform. But on condition that the outstanding questions concerning protective security and contingency procedures can be resolved, and that a connection to the T2 platform will mean that the Riksbank can continue to pursue an independent monetary policy, the assessment is that using the Eurosystem’s T2 platform would offer significant advantages and efficiency gains.
The aim of the preliminary study was to produce a decision guidance for the Riksbank’s decision on the future settlement system for payments. What functionality is required to supply an efficient system for the settlement of payment transactions, what requirements should be made of the security of the system, and what are the needs of the market, were some of the questions analysed. It was therefore important for the Riksbank to acquire a good knowledge of the needs of the participants in the RIX system and how these needs can be met.
The participants in the RIX system, the Swedish Bankers’ Association and P27 were invited to respond to the consultation and give their views on the Riksbank’s settlement service for large-value payments, the RIX system and what should be included in a future settlement service.
The responses show strong support for harmonisation and standardisation as part of making the payment area more efficient. One can also see a trend towards increased use of instant payments. Continuity and security, especially cyber security, were other issues raised in the responses.
The respondents are on the whole satisfied with both the functionality and opening hours of the current RIX system, but mention that there is scope for further efficiency. With regard to a potential future connection to the Eurosystem’s T2, there was broad unity that T2 offers significant economies of scale in the form of joint processes, administration and development, and increased resources for security. On the minus side, some concern was expressed regarding costs and resources in connection with joining T2, reduced influence and continuity in the event of operational disturbances.
The Riksbank published the consultation ”The Riksbank’s future settlement service” in February 2021. The consultation period ran from the middle of March 2021. The Riksbank received 22 responses to the consultation. Read more in the document “Summary of responses provided in the consultation on the Riksbank’s future settlement service”.