Real-time gross settlement refers to processing financial transactions individually and continuously as they occur. This system ensures that each payment is settled immediately and irrevocably on a gross basis, meaning without netting against other payments. Transactions are finalized in real-time, eliminating settlement risk between parties and providing certainty of payment. Central banks often operate Real-Time Gross Settlement (RTGS) systems for large-value interbank transfers, crucial for financial stability.
Context
The concept of real-time gross settlement is gaining renewed attention in the digital asset space, particularly with discussions around central bank digital currencies (CBDCs) and faster payment systems. Blockchain technology inherently supports real-time, gross settlement for on-chain transactions, offering a decentralized alternative to traditional RTGS systems. The challenge lies in scaling these systems to handle high transaction volumes while maintaining security and decentralization. Regulators and financial institutions are exploring how to leverage real-time gross settlement principles to modernize payment infrastructures globally.
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