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Whereas the key achievements in the 1990s were speed and safety of payments, the focus has been to reduce liquidity costs and to provide users with more flexible intraday liquidity management. Interbank payments today settle faster, with a lower amount of liquidity, and at a lower cost. In parallel, new systems and arrangements have emerged to meet an expanding demand for cross-border payments.
While certain trade-offs exist between achieving lower risks and achieving lower costs, recent developments in LVPS design allow more flexibility in addressing various risk and cost trade-offs than previously available in traditional financial architectures. Central banks have continued to seek a balance between more stringent risk controls and the need for systems to be cost-efficient.
The analysis in the report shows that the complexity of trade-offs between risks and costs implies a wide range of possibilities for the design of an LVPS. There is therefore no single solution fitting all markets and all participants’ preferences. Hence, the report does not prescribe the adoption of any specific feature or design element introduced in a given LVPS. Owners should take these considerations into account when deciding on the features of their system within the policy standards set by the relevant authorities.