The Central Bank of Nigeria (CBN) revealed the installation of a new Real Time Gross Settlement System (RTGS) that is integrated with a Scripless Securities Settlement System (SSSS). According to CBN, the development was part of the execution of the Payment System Vision 2020 Strategy which sought to tackle the inherent limitations in the settlement system in the country. Basically, The RTGS is an interbank payment infrastructure that facilitates the real-time (continuous) settlement of electronic funds transfers on gross (individual), final and irrevocable basis.
The new RTGS replaces the one that was implemented seven years ago as part of the then CBN transformation programme code-named Project EAGLES. It serves as the nucleus of the national payment system, as all payments finally settle in central bank money, through settlement accounts maintained for designated financial institutions. All retail payments (cheques, cards, mobile money, funds transfers, ATMs) are cleared by the Nigerian Interbank Settlement System and the net settlement positions of the settlement financial institutions are posted to the RTGS.
The integration and simultaneous deployment of the RTGS and SSSS represented a major strategic move that would assist in radically reducing systemic risks associated with payment systems. With the implementation of the RTGS and SSS, the Nigerian Payment System is positioned to progressively improve all retail payments schemes with a view to achieving the PSV2020 objectives and meeting world-class standards. The development is expected to stimulate rapid transformational developments in the financial markets - allowing real-time settlements of transactions in the capital, commodity and foreign exchange markets.
This development will enhance a robust infrastructure to handle faster processing of electronic payments related to banking and financial market services as well as the expansion of the functionality and effectiveness of government securities. Other advantages include the improvement in liquidity management; facilitating more efficient monetary policy implementation; facilitation of transformation efforts to improve the efficiency and transparency of government receipts and payments; provision of a more efficient, secure and appropriate payments landscape to encourage foreign investment, improve financial intermediation efficiency, and enhance financial inclusion.
The move would also help to enhance a robust infrastructure to handle faster processing of electronic payments related to banking and financial market services as well as the expansion of the functionality and effectiveness of government securities.