Booklet of The Bank Indonesia Real Time Gross Settlement (BI-RTGS) System​ - Bank Sentral Republik Indonesia
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October 21, 2020

In recent years, almost all of the G-10 developed nations have implemented the Real Time Gross Settlement (RTGS) system for interbank transfers. According to a BIS report, the RTGS system is in use in at least 30 countries. In a further move, the European Central Bank has decided that each EU member must have an RTGS system that can be integrated into the EU RTGS system (TARGET) in support of a common economy.

In the Asia-Pacific region, economies such as Hong Kong, Korea, Australia, China, New Zealand and Thailand have all followed suit. In Indonesia, the RTGS was launched on 17 November 2000 under the name of the Bank Indonesia Real Time Gross Settlement (BI-RTGS) System.

The BI-RTGS system in Indonesia is regarded as highly important because of the previous potential for systemic risk associated with high value payments, which accounted for the majority (almost two thirds) of payment transactions.
Research findings also showed that almost 70% of high value interbank payments in Jakarta, representing more than 10 thousand transactions daily, originated from forex transactions and the interbank money market.

The prevailing reasons for use of the RTGS system in other countries are as follows. First, literature and intensive empirical studies have prompted an emerging awareness among some central banks regarding the management of various risks in large value transfer systems (LVTS). The RTGS system operates a settlement mechanism seen to be capable of minimising systemic risk. Secondly, the system will reduce the incidence of floating funds, and thus support more effective bank supervision. A further consideration is that sound liquidity management in the banking community will also strengthen monetary policy effectiveness. Third, the RTGS system supports integration with other payment system applications, such as for money market and capital market transactions settled by Delivery versus Payment (DVP). Links with cross border payments are also possible using the Payment Versus Payment (PVP) application

The BI-RTGS system is a payment settlement process for individual processing of payments in an electronic system for gross settlement in real time, in which member accounts may be debited/credited multiple times during one day as per payment orders and incoming payments.

With the BI-RTGS system, sending members use their RTGS terminals in their offices to transmit payment transactions to the RTGS Central Computer (RCC) at Bank Indonesia for settlement processing. If settlement is successful, the payment will be forwarded electronically to the receiving member in an automatic procedure. Successful completion of settlement depends on sufficient balance in sending member account, because on the BI-RTGS system members are permitted only to credit the accounts of other members. In other words, BI-RTGS members must ensure sufficient balance in their accounts at Bank Indonesia before transferring funds to other BI-RTGS members.



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