Central Banking

Liquidity gridlock feared from Japan's RTGS launch

Japan's introduction of real time settlement for stock and bond transactions may expose banks and brokerages to a temporary liquidity gridlock that could force some to reduce yen-based operations, bankers said on Wednesday.

The Real-Time Gross Settlement (RTGS) system to be launched by the Bank of Japan on January 4 will be used to settle fund transactions in the bond and money markets, shifting from current settlement three times a day.

The aim is to reduce current risks of counterparty default

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