Model of liquidity and blockade management in paying systems

As a consequence of the ongoing individual settlement of payments in RTGS systems, the participants have a large intra day liquidity requirements. Participants can manage their on outgoing payments (debit postings), but do not usually know with certainty when incoming payments will be received (credit postings). It is therefore essential to an efficient RTGS system (Clearing and Securities settlement system as well) that there is sufficient liquidity in the system (participants to have cover for the outgoing payments, or to apply for intra day Central bank credit facilities using short term securities as a collateral). The authors have offered the model for liquidity and gridlock/deadlock management which could be applied in a real payment systems environment, and could serve as a management tool for entire payment system liquidity, bypass and optimization routines control and management. The approach is to optimize the liquidity, to avoid an accumulation of queued payments during the processing day and to settle a maximum number of payments in the payment system achieving the maximum financial effect, transactions speed and profitability.