Gridlock Resolution in Interbank Payment Systems
Bank of Finland Working Paper No. 9/2001
34 Pages Posted: 30 Jun 2001
Date Written: June 13, 2001
The paper analyses the severity of gridlocks in interbank payment systems operating on a real time basis and evaluates by means of simulations the merits of a gridlock resolution algorithm. Data used in the simulations consist of actual payments settled in the Danish and Finnish RTGS systems. The algorithm is found to be applicable to a real time environment and effective in reducing queuing in the systems at all levels of liquidity, but in particular when intra-day liquidity is scarce.
Keywords: payment systems, liquidity, gridlock, algorithms, settlement
JEL Classification: E58
Suggested Citation: Suggested Citation