Media Release Real-time Gross Settlement (RTGS) – Liquidity

Under RTGS the Reserve Bank will stand ready to provide intra-day liquidity to banks and others with Exchange Settlement Accounts, to ensure that payments flow smoothly. This liquidity will take the form of within-day repurchase agreements in Commonwealth Government Securities.

The initial intention was to impose a fee (of 10 basis points per annum) on these repurchase agreements but, following discussion with industry participants, the Reserve Bank has now decided that it will provide this liquidity free of charge, apart from a RITS transaction fee. The transaction fee will be the same as that applying to mortgages, and will amount to $3 per line of stock per leg of each transaction.

This decision should ensure that there is no obstacle to banks and others being able to generate a steady supply of liquidity to support the RTGS system which is due to commence in the first half of 1998. The Bank will keep the arrangements under review to ensure that they do not undermine its control over monetary conditions.