Payments systems - Gross and Net Settlement

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Multilateral clearing plays a crucial role in payment systems. The video explains what it is.
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0:00 Introduction
0:49 Definition of settlement (BIS)
1:49 Gross settlement and RTGS systems
4:20 Real-Time Gross Settlement happens in Central Bank systems
7:44 Multilateral Clearing systems implement Net Settlement
8:30 Gross settlement vs Net Settlement

[@sabeenaabdulbari9568]

Very clear and understanding video. Thank you.

[@gitapermatasari7624]

Thanks for the video :))

[@kapcool4780]

Hi Jean, Thanks and i appreciate your work on the video. Just one question - in net settlements transaction are exchanged without transfer of funds, so any validation takes place on debit account for fund availability?

[@jagrutiattarde5818]

Hi Jean, Recently started following your channel. Your explanation on every topic is precise, to the point and very clear. Thank you. Have query on below (questions might be very basic but I am new to payments) Q. What is the exact difference between Gross Settlement and Real time Gross Settlement in terms of time in settlement. Are the gross payment not settled immediately as the case with RTGS. ? Q. In which cases Prefunding by Central bank could take place ?

[@ankita924]

Hi Jean, really appreciate your videos are quite helpful. When you say in net settlement transactions are exchanged without transfer of funds.......what does that mean, please elaborate. Thanks!!

[@Lueanimations]

Good gob my brother ❤️

[@ernstmunk9131]

with the huge cover of internet connections worldwide. Then it must be possible to make transfers more simple also because of the nets huge instant capacity

[@paymerix]

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[@havellteylar2598]

What is the defintion of "netting"?

[@ferv8814]

thank uu

[@bryandelbroek6162]

With instant payments, is it the same mechanism as RTGS?

[@paymerix]

It is almost the same since funds must be available for the payment to be processed. RTGS happens in Central Bank systems, but not always the settlement of instant payments. There is one specificity. A bank can open and move central bank funds to an account held by a clearing system (that process is called prefunding), so that the clearing system does not need to access central bank systems everytime a transaction is processed. Those accounts are debited and credited depending of the type of transactions processed. The bank must ensure that there is always enough liquidity on that account.

[@bryandelbroek6162]

@@paymerix thank you. Your videos are really helpful to me.

[@paymerix]

@@bryandelbroek6162 Thank you for your appreciation.

[@coolaries24]

Difference between netting and clearing is not clear to me.. can help me to understand?

[@paymerix]

Netting is part of the clearing process. It is the most important step in the clearing process which encompasses transmitting the messages, confirming them, netting the amounts, and so on. I hope it clarifies.

[@Nico-rl4bo]

ew

[@Nico-rl4bo]

good video tho