Channelling government securities redemption into VIBER and its effects on payment systems and its participants

Levente Habány () and Anikó Turján
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Levente Habány: Magyar Nemzeti Bank (central bank of Hungary)

MNB Bulletin (discontinued), 2010, vol. 5, issue 2, 22-30

Abstract: Starting from October 2009, redemption of government securities was transferred to the real-time gross settlement system (VIBER) developed for the settlement of time-critical transfers and operated by MNB. This step ensures that the settlement of redemption is performed in the clearing system where the financial performance related to the issue of government securities has been carried out for a long time. Channelling redemption to VIBER has achieved its goal, as it allowed the issuer (the Hungarian state) to use the funds stemming from the issue for the purposes of repayments and manage its liquidity in a simpler and more flexible way. In addition, this change has not caused a significant liquidity shortfall for participants in either of the two payment systems. This resulted in clearly less liquidity demand in the financial settlement processes related to the issue of government securities and redemption upon expiry. Not even a slight disruption was caused by changeover in the payment systems: thanks to proper preparatory work, all the affected system participants changed to the new liquidity procedure without any particular adjustment pressure.

Keywords: redemption of government securities; State treasury; custodians; real time gross settlement system gridlock resolution; payment systems; liquidity saving mechanism (search for similar items in EconPapers)
JEL-codes: E42 G21 G28 H74 (search for similar items in EconPapers)
Date: 2010
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