2504
Global Trends of Payment Systems and the Next-Generation RTGS Project in Japan
transactions. Most of the transactions that are
processed by this system are yen leg settlements
of foreign exchange transactions and international
treasury settlements. The FXYCS has the RTGS
mode as well as the DTNS mode, although the use
of the RTGS mode, which includes the payment
for CLS bank, is quite limited.
The Zengin System
T h e Z e n g i n S y s t e m i s a n a t i o n w i d e e l e c t r o n i c f u n d
WUDQVIHUQHWZRUN$OPRVWDOO¿QDQFLDOLQVWLWXWLRQV
LQ-DSDQPRUHWKDQ¿QDQFLDOLQVWLWXWLRQV
participate in the Zengin System and use this
system mainly for customer payments. As many
of the payments made through this system are
consumer and commercial payments, the transac-
tion volume are extremely large, but the amount
of each payment is rather small. In addition to
single payments, the system also supports batch
SD\PHQWV¿OHFRQWDLQLQJDQXPEHURISD\PHQWV
such as payroll and pension payments. The Zengin
6\VWHPLVD'716V\VWHPZKRVH¿QDOVHWWOHPHQW
of net positions takes place at the end of the day
at the current account of the BOJ.
Sharing of Roles Among Three
Systems
The BOJ-NET and the FXYCS are mainly for the
inter-bank payments and characterized as large-
value payment systems. On the other hand, the
Zengin System is mainly for the customer pay-

ments and regarded as a retail payment system.
But, we have to pay some attention that some
large-value payments are also processed in the
Z e n g i n S y s t e m . T h a t i s b e c a u s e o f a h i s t o r i c a l r e a -
son; international related payments are assigned
to the FXYCS by the law of foreign exchange
control, and domestic payments are handled by
the Zengin System.
Proposal of the RTGS-XG Project
Proposal of Japanese Bankers
Association
In March 2004, Japanese Bankers Association
7
-%$SXEOLVKHGDUHSRUW³3URSRVDOIRU5HRUJDQL]-
ing Fund Transfer Systems in Japan—Introduc-
ing a Large Value Settlement System” (Japanese
Bankers Association, 2004). This report proposed
WKH LQWURGXFWLRQ RI D ³/DUJH 9DOXH 6HWWOHPHQW
System.” The aims of the proposal were to reduce
the settlement risk, to comply with the interna-
WLRQDOVWDQGDUGVDQGWRLPSURYHWKHHI¿FLHQF\RI
fund settlement.
The proposal envisages the integration of large-
value fund settlements in Japan. If this proposal
was realized, fund transfer systems in Japan,
which consists of the BOJ-NET, the FXYCS,
and the Zengin System would be reorganized
into a Large Value Settlement System and the
Zengin System would be specialized in small
value payments.

The JBA submitted the report to the BOJ for
further consideration, because the restructuring
of the BOJ-NET was the key factor for realizing
the proposal. Therefore, one can argue that the
RTGS-XG project took root in private sector
initiative.
BOJ’s Proposal
In response to the proposal of JBA, after deliber-
ate consideration (Imakubo, Kei, & McAndrews,
J. J., 2005), the BOJ announced its proposal for
the Next-Generation RTGS (RTGS-XG) in No-
vember 2005 (Bank of Japan, 2005). Following
the public consultation process, the BOJ decided
to implement the project and started the system
development phase in February 2006 (Bank of
Japan, 2006a). The purpose of this project was
WRIXUWKHU HQKDQFHWKHVDIHW\DQGHI¿FLHQF\RI
large-value payment systems in Japan,
2505
Global Trends of Payment Systems and the Next-Generation RTGS Project in Japan
Outline of the RTGS-XG Project
The RTGS-XG project consists of two sub-proj-
HFWV7KH¿UVWVXESURMHFWLVWRDGGOLTXLGLW\VDY-
ing features (LSF) to the pure RTGS mode of the
BOJ-NET. The second sub-project is to incorpo-
rate large-value payments currently handled by
two private-sector DTNS systems, the FXYCS,
and the Zengin System, into the new BOJ-NET
with the LSF.
Sub-Project A

The sub-project A is to add the LSF into the BOJ-
NET. The LSF consists of Centralized Queuing
Function and Offsetting Function.
Centralized Queuing Function
As the current BOJ-NET doesn’t have a centralized
queue, if a bank does not have enough liquidity
at the current account at the BOJ, the payment
instruction is rejected by the system and sent back
to the sending bank. Once the centralized queue
is constructed in the BOJ-NET, the payment order
that is not covered by adequate liquidity would
be suspended in the queue. Each participant can
actively control the payment instructions in the
TXHXHIRUWKHHI¿FLHQWVHWWOHPHQWZKLFKLQFOXGHV
monitoring, setting the priority, reordering, and
cancellation of the payment instructions.
Offsetting Function
Offsetting means the simultaneous processing
of outgoing and incoming payment orders. The
offsetting algorithm searches for the participants
who have submitted payment orders for each
RWKHU DQG FDOFXODWHV WKH QHW DPRXQW RI LQÀRZ
DQG RXWÀRZ ,I WKH QHW RXWÀRZ LV VXI¿FLHQWO\
covered, which means the credit balance of the
GHELWHGSDUWLFLSDQWLVODUJHUWKDQWKHQHWRXWÀRZ
the system process the incoming and outgoing
payment order simultaneously. The outcome of
the offsetting is exactly the same as the netting
of the two payment orders. The only difference
is whether two payment orders are processed

individually in a gross basis or the net amount is
simply processed.
In the RTGS-XG project, two kinds of offset-
W L Q J D U HSO D Q Q H G W RE HL Q W U R G XF H G  2 QH L V³ EL O DW H U D O 
offsetting,” in which payment orders are processed
between the two participants. Bilateral offsetting
is regarded as the main function for settlement, and
the algorithm will run when certain movements
take place in the system, including submission
of a new payment instruction, increase in credit
balance, and settlement, reordering or cancellation
of a top-queued payment.
7KHRWKHULV³PXOWLODWHUDORIIVHWWLQJ´LQZKLFK
payment orders are processed among three or more
participants. Multilateral offsetting is regarded
as the complementary function to the bilateral
offsetting, and the algorithm will run at desig-
nated times of the day. The execution times of
multilateral offsetting will be set when there are
fewer events initiating bilateral offsetting, since
while the multilateral algorithm runs, the receipt
of the new payment orders will be suspended.
With these two offsetting functions, real-time
gross settlement will be possible in a faster pace
with lower amount of liquidity.
LSF Account
Participants who use the LSF should open the
special account, the LSF account, in the RTGS-
XG The LSF account is independent from the
current account of the BOJ-NET, thus each par-

ticipant should manage the respective liquidities
of two accounts
8
.
Participants can transfer the liquidity at any-
time during the daytime between the current ac-
count and the LSF account. Although the overdraft
is not admitted at the LSF account, participants
can obtain liquidity from the BOJ through the
overdraft facility at the current account. While
the operating hours of the current account is
2506
Global Trends of Payment Systems and the Next-Generation RTGS Project in Japan
from 9:00 to 17:00
9
, participants can use the LSF
account from 9:00 to 16:30. At 16:30, all the bal-
ances at the LSF accounts will be automatically
transferred back to the current accounts, which
mean the balance of the LSF will be zero at the
end of the day. If there are some remaining pay-
ment orders in the queue, these orders will be
cancelled automatically.
The incoming and outgoing payment to/from
a LSF account should be processed only against
the LSF account of other participants and can
not be processed against the current accounts of
other participants.
Most transactions between participants can be
processed through the LSF account. Although

some transactions should be executed at the cur-
rent account, which includes 1) the transactions
involving the BOJ and the government, 2) the
net settlements of clearing systems (the Bill and
Check Clearance and the Zengin System), and 3)
the Delivery versus Payment (DVP) settlements
of Japanese Government Bonds (JGB) and cor-
porate bonds.
Sub-Project B
Current Situation of Large-Value Payment
in Japan
Currently, the large-value payments in Japan are
divided into three payment systems. First of all,
the BOJ-NET is the main settlement channel of
large-value payments and settled 88.3 trillion
yen on a daily average basis in 2005. The second
one is the FXYCS, which handles mainly foreign
exchange related payments. The FXYCS settled
16.4 trillion yen per day in 2005. The last one is
the Zengin System, which is usually regarded
as a retail payment system. However, a part of
payments in the Zengin System, 0.2% of total
volume, are large-value payments that are 100
million yen and up. These 0.2% large-value pay-
ments accounted for 65% of total value, which is
equivalent to 6.2 trillion yen per day in 2005.
These divided large-value payments lead to
some issues. Among them, there is a duplication
situation. The Zengin System and the FXYCS
are both the same kind of payment system, that

is, the DTNS at the end of the day. It used to be
the request of the law
10
to divide foreign exchange
related payments from domestic payments, but
the law was radically revised in 1996 and there
is no need for the distinction any more. This en-
vironmental change created the duplication as a
UHVXOWPRUHVSHFL¿FDOO\WRRSHUDWHDQGPDLQWDLQ
the two same kind of end of day net settlement
systems.
Consolidation of Large-Value Payment
Flows
The sub-project B of the RTGS-XG project is to
incorporate large-value payments on the FXYCS
and the Zengin System into the new BOJ-NET.
7KHWZREHQH¿WVDUHSRLQWHGRXWIRULQFRUSRUDWLQJ
the payments in the private-sector DTNS systems
into the BOJ-NET. Firstly, participants can obtain
LQWUDGD\¿QDOLW\ZLWKWKHFRQWLQXRXVO\VHWWOHPHQW
RIWKH/6),WLVDVLJQL¿FDQWULVNPLWLJDWLRQFRP-
SDUHGWRWKHFXUUHQWVFKHPHRIHQGRIGD\¿QDO-
ity in the private-sector systems. Secondly, the
57*6 ;*D FK LH YHV J U H D W H UH I ¿FL H Q F \ L Q O LTX LG L W \
usage. The LSF can save the liquidity by offset-
ting the outgoing payment and incoming payment
compared to the pure RTGS system, in which all
the settlement is made on gross basis.
Under the RTGS-XG, the FXYCS payment
will be forwarded to the BOJ-NET via the

FYXCS. And the main function of the FXYCS,
the DTNS mode, will be abolished. As for the
Zengin System, a newly developed interface will
pick up the large-value payments and send them
to the BOJ-NET, while the remaining small-value
payments are processed in the Zengin System as
before, in the DTNS method. When the interface
sends large-value payments to the BOJ-NET,
only interbank payment information will be sent,
2507
Global Trends of Payment Systems and the Next-Generation RTGS Project in Japan
while customer information will be kept in the
Zengin System.
Implementation Timetable
Phased implementation is planned for the RTGS-
XG project. As for the phase 1, the development
RIWKH/6)DQGWKHPRGL¿FDWLRQRIWKH);<&6
ZLOOEH¿QLVKHGDQGWKHQHZV\VWHPLVSODQQHG
WREHODXQFKHGLQ¿VFDO\HDU
11
2008.
:LWKUHJDUGWRSKDVHWKHPRGL¿FDWLRQIRU
large-value Zengin payments, including the de-
velopment of interface to the BOJ-NET, will be
completed in 2011, when the next upgrading of
the Zengin System is planned.
THE RTGS-XG PROJECT AND THE
GLOBAL TREND
Feature Analysis of the RTGS-XG
As features of the RTGS-XG, three characteris-

WLFVFRXOGEHLGHQWL¿HGZKLFKLQFOXGH,QWHJUDWHG
system, two-account system, and offsetting sys-
tem.
Integrated System
The RTGS-XG of BOJ-NET will have two modes
for settlement. At the current account, participants
will be able to make a simple RTGS, just as the
same as the current BOJ-NET. This mode can
EHFDOOHGWKH³SXUH57*6PRGH´2QWKHRWKHU
<C urrent situation>
<Future>
BOJ- NET
(RTGS)
FXYCS
(DTNS)
Zengin System
(DTNS)
(RTGS- XG)
BOJ- NET
RTGS mode
Hybrid mode
(LSF)
Zengin System
(DTNS)
\88.3 trillion
\16.4 trillion
\9.5 trillion
\110.9trillion
\3.3 trillion
small value

large value
)LJXUH&RQVROLGDWLRQRIODUJHYDOXHSD\PHQWÀRZV
Note: Settlement values are daily averages in 2005
2508
Global Trends of Payment Systems and the Next-Generation RTGS Project in Japan
hand, at the LSF account, continuous settlement
with liquidity saving feature will be possible.
7KHODWWHUPRGHWKH³OLTXLGLW\VDYLQJPRGH´LV
a Hybrid mode, where offsetting is executed on
a continuous basis.
Having both the RTGS mode and the Hy-
EULGPRGHWKH57*6;*ZLOOEHGH¿QHGDVDQ
Integrated System. Participants will be able to
select the mode of settlement according to the
character of the payment. It is expected that most
of the payment will be made in liquidity saving
mode, because participants can make settlement
with fewer amount of liquidity, which means the
cost-saving for the participant. As for the urgent
payment or time-critical payment, it is expected
to be processed in the pure RTGS mode. Also
some transactions, including BOJ and government
related transaction and DVP settlement of JGB,
are assigned to the pure RTGS mode.
In the evolutionary process of payment sys-
tems, the RTGS-XG will be one of the cutting
edges of the world payment systems, along with
RTGS
plus
in Germany, PIS in France, new BI-REL

in Italy, and LVTS in Canada.
Two-Account System
The RTGS-XG will have two separate accounts
in one system: the current account and the LSF
account. Participants will have to monitor and
manage the two liquidities in each account during
t h e d a y. I n s o m e I n t e g r a t e d S y s t e m s , l i k e RTG S
plus
in Germany, single liquidity pool is adopted, and
participants can control the liquidity in the single
account. The single liquidity pool would be more
user-friendly than two-account system. But, the
RTGS-XG will allow participants to transfer the
OLTXLGLW\ÀH[LEO\EHWZHHQWKHWZRDFFRXQWVGXU-
ing the day (all day liquidity bridge). Thus, it is
presumed that management burden of two liquidi-
WLHVZRXOGQRWEHVLJQL¿FDQW,WLVDSSDUHQWZKHQ
compared to the case of the EAF2 in Germany,
which allowed transferring the liquidity only
once every hour.
In terms of two accounts, the RTGS-XG has
similar structure to the PIS in France, where
liquidity bridge combines the PNS account and
the TBF account.
In the case of the RTGS-XG, consideration for
the system development was the major factor to
choose the separate LSF account. The BOJ-NET
provides not only fund transfer service but also
government bond settlement service. Therefore,
the current account already has a very sophisti-

cated link with the JGB account in the BOJ-NET
through DVP mechanism and self-collateral
scheme. It seemed concerned that to add the LSF
to the current account might make the account
structure too complicated.
Offsetting System
The RTGS-XG adopts the offsetting scheme. As
mentioned earlier, there is not much difference
between netting scheme and offsetting scheme,
with regard to the outcome of the processing. In
both cases, the difference of outgoing payment
and incoming payment would be added or debited
from the participants’ account.
The concept of offsetting was introduced to the
RTGS
plus
LQIRUWKH¿UVWWLPHLQWKHZRUOG,W
was because the RTGS
plus
would be a part of the
TARGET, and only RTGS systems were allowed
to link to the TARGET. So to avoid becoming a
netting system that could not be liked the TAR-
GET, Deutsche Bundesbank invented the concept
of offsetting, which means the simultaneous
ERRNLQJRIRIIVHWWLQJSD\PHQWÀRZV
In the case of the BOJ-NET, there is no such a
constraint. But only a situation was BOJ abolished,
the netting mode in 2001 when the BOJ-NET
became a pure RTGS system. So it would pre-

VXPDEO\EHUDWKHUGLI¿FXOWIRUWKH%2-WRH[SODLQ
the LSF as adding a netting function again only
several years after. It is just conceivable that this
might be a sort of reason to adopt the offsetting
concept instead of netting concept.
2509
Global Trends of Payment Systems and the Next-Generation RTGS Project in Japan
%HQH¿WVRIWKHRTGS-XG Project
Upon the characteristics of the RTGS-XG men-
WLRQHGOHWXVVHHWKHEHQH¿WVWKLVSURMHFWZRXOG
bring.
To Achieve Earlier Settlement and
Reduce the Risk
7KH¿UVWEHQH¿WLVWRUHDOL]HWKHHDUOLHUVHWWOHPHQW
DQGWKH¿QDOLW\LQWKHGD\WLPHZKLFKOHDGWRWKH
risk reduction. Large-value payments that are
currently processed in the FXYCS and the Zengin
V\VWHPREWDLQWKH¿QDOLW\RISD\PHQWRQO\DWWKH
end of the day. After incorporating all large-value
payments into the RTGS-XG, all the settlements
will be made on a real-time basis and get the
¿QDOLW\GXULQJWKHGD\,WLVFDOOHG³LQWUDGD\
¿QDOLW\´,WLVDPDMRUEHQH¿WRIWKH57*6;*WR
JLYHHYHU \OD UJH YDOXHSD\ PHQWLQWUD GD\¿QDOLW\
and reduce the settlement risk.
To Reduce Liquidity Cost
7KHVHFRQGEHQH¿WLVWKHUHGXFWLRQRIWKHOLTXLG-
ity cost for the participants. With the LSF, par-
ticipants can make continuous gross settlement
with small amount of liquidity by offsetting their

o u t g o i n g p a y m e n t s w i t h i n c o m i n g p a y m e n t s f r o m
other participants. Although the BOJ provide
the intra-day overdraft with no fee, participants
have to pledge collaterals to get the overdraft.
Thereafter, the RTGS-XG reduces the cost for
participants by reducing the liquidity necessary
for the settlement.
To Prevent Gridlock
7KH WKLUG EHQH¿W LV WR SUHYHQW JULGORFN LQ WKH
payment system. In the pure RTGS system, par-
ticipants tend to wait for the incoming payments
before sending out their outgoing payments, or
sometimes try to send the payment instructions
as late as possible in order to save their liquidity.
If many participants try to do the same thing,
the circulation of liquidity in the system would
be blocked and prevents a substantial number of
instructions from being executed. This kind of
VLWXDWLRQLVFDOOHG³JULGORFN´:LWKWKH/6)WKH
57*6;*PDWFKHVWKHRIIVHWWLQJSD\PHQWÀRZV
and saves the liquidities of both sides. This will
substantially reduce the necessity for participants
to hold off on sending payment instruction. Ac-
cordingly, participants are expected to send their
instructions earlier and overall earlier settlement
in the system would be accomplished.
To Comply with the International
Standard
The compliance with the international standards
LVDQRWKHUHVVHQWLDOEHQH¿W,Q-DQXDU\WKH

Bank for International Settlements (BIS) pub-
O LV KH G ³& RU H3 U L Q FL SOH VI R U 6 \V W HP L F D O O \, P S R U W D Q W
Phase Sub-Project Estimated time
Phase1
Development of LSF in BOJ-NET
0RGL¿FDWLRQIRU);<&6SD\PHQWV
Fiscal 2008
Phase2
Modification for large-value Zengin
payments
2011
Table 6. Implementation timetable of the RTGS-XG project
2510
Global Trends of Payment Systems and the Next-Generation RTGS Project in Japan
Payment Systems (Core Principles)” and these
principles are regarded as an essential interna-
tional standard to be observed. Core Principle
,9GHVFULEHV³7KHV\VWHPVKRXOGSURYLGHSURPSW
¿QDOVHWWOHPHQWRQWKHGD\RIYDOXHSUHIHUDEO\
during the day and at a minimum at the end of
WKHGD\´7KH¿UVWSDUWDFKLHYLQJ¿QDOVHWWOHPHQW
E\WKHHQGRIWKHGD\LVUHJDUGHGDVD³PLQLPXP
standard” which every country should observe.
Fortunately, three Japanese payment systems, the
BOJ-NET, the FXYCS, and the Zengin System
meet the requirement.
On the other hand, the latter part, achieving
LQWUDGD\¿QDOLW\LVUHJDUGHGDVD³EHVWSUDFWLFH´
which is recommended for the advanced countries.
7KH&RUH3ULQFLSOHVUHSRUWDOVRPHQWLRQHG³3UR-

YLGLQJLQWUDGD\¿QDOLW\LVSDUWLFXODUO\GHVLUDEOH
in countries with large volumes of high-value
SD\PHQWVDQGVRSKLVWLFDWHG¿QDQFLDOPDUNHWV´
No one might want to contend that the Japanese
PDUNHWLVQRWLQFOXGHGLQWKLVGH¿QLWLRQ7KXV
LQWUDGD\¿QDOLW\ZRXOGEHGHVLUDEOHIRUWKHSD\-
ment systems in Japan, but the FXYCS does not
PHHWWKLVUHTXLUHPHQW¿QDOLW\LVSURYLGHGRQO\
at the end of day.
Actually, it was the starting point of the
discussion for the reform plan of large-value
payment systems. The discussion on how to
FRPSO\WKHLQWUDGD\¿QDOLW\UHTXLUHPHQWOHDG
to the proposal of the JBA and developed to the
RTGS-XG project.
The RTGS-XG will settle all the large-value
SD\PHQWZLWKLQWUDGD\¿QDOLW\ZKLFKZLOOPHHW
the requirement of Core Principles. This is another
LPSRUWDQWEHQH¿WRIWKLVSURMHFW
FUTURE TRENDS
Ahead of BOJ, the Monetary Authority of Singa-
SRUH0$6VXFFHVVIXOO\LPSOHPHQWHG³0(36´
LQ'HFHPEHU0(36ZDVWKH¿UVW,QWHJUDWHG
System in Asia, which replaced the previous na-
tional inter-bank payment system, MEPS.
The remarks of the managing director of MAS
would give us a practical suggestion. He mentioned
WKDWFKDQJHVLQWKH¿QDQFLDOODQGVFDSHKDGOHGWR
DQHHGIRUPRUHHI¿FLHQWOLTXLGLW\PDQDJHPHQW
improved risk management and more streamlined

SD\PHQWÀRZVDQG0(36ZDVGHVLJQHGWRPHHW
these needs. If the market demand works in the
same way, it is highly possible that the payment
systems would continue an evolutionary progress
with the aid of technological innovation in order
to meet the market needs.
Shortly after the RTGS system was invented,
only a handful of countries adopted this innova-
tive system, which was quite effective in reduc-
ing the settlement risks. However recently, the
number of countries that adopt the RTGS system
is getting close to 100. Therefore, one can predict
WKDWWKHVH³$GYDQFHG6\VWHPV´ZRXOGJUDGXDOO\
become the prevailing system throughout most
of the world. It should be added that the RTGS
system took more than 20 years to become the
prevailing system.
CONCLUSION
Technological progress and market needs push
ahead with deployment of new types of payment
systems, which include the Hybrid System and
the Integrated System. These Advanced Systems
bring a better combination of risk reduction and
HI¿FLHQWVHWWOHPHQW7KH1H[W*HQHUDWLRQ57*6
Project in Japan would be a good example of such
ongoing progress. This trend for sophisticated
payment systems is believed to continue and be-
come widespread. We should keep a sharp eye
on the progress and analyze how the new wave of
payment systems would affect on the risk control

and liquidity management.
Future Research Directions
As mentioned in this chapter, the designs for the
payment systems are changing, which created the
2511
Global Trends of Payment Systems and the Next-Generation RTGS Project in Japan
n e w t y p e o f A d v a n c e d S y s t e m s . T h i s p r o g r e s s w a s
the reaction to the market needs that seek more
sophisticated liquidity control and risk manage-
ment. The market needs and historical background
vary from country to country and the technologies
that can be adopted would differ at the time of
implementation. As a consequence, the Advanced
Systems vary in the system designs and functions,
especially queue management, payment match-
ing, liquidity control, account structure, and so
on. These kinds of diversity should be analyzed
further with the reason behind.
Liquidity and risk is the most important key
words when discussing the payment systems.
That is to say, how to reduce the settlement risk
and how to make settlements with lower amount
of liquidity was the two main subjects to improve
the payment system. The payment systems have
been progressed balancing the two factors. How
did the Advanced Systems contribute to the
improvement of the two factors? That would be
another meaningful research topic.
This chapter focused on the large-value pay-
PHQW V\VWHPV LQ WKH SD\PHQW ¿HOG %XW PDMRU

innovations are also taking place in the retail
SD\PHQW¿HOGLQFOXGLQJHOHFWURQLFPRQH\PR-
bile payment, e-commerce, and micro-payment.
These areas have numerous research topics to
be done.
As a theoretical approach, some economists try
to analyze payment systems using game theory,
information economics, and theory of industrial
RUJDQL]DWLRQ7KLVDUHDLVFDOOHG³(FRQRPLFVRI
Payments,” which seems to be one of the promis-
ing area of research.
Last but not least, what is the most desirable
payment system? It is widely alleged that there is
no single solution for the ideal payment system.
But someone may not be convinced with the
common belief.
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Global Trends of Payment Systems and the Next-Generation RTGS Project in Japan
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ENDNOTES
1
Payment systems are generally divided into
two categories: large-value payment systems
(LVPS) and retail payment systems. LVPS
facilitate payments, generally of very large
amounts, which are mainly exchanged be-
tween banks and usually require urgent and

timely settlement. Retail payment systems
handle mainly consumer payments of rela-
tively low value and urgency. As LVPS are
WKH PRVW VLJQL¿FDQW SD\PHQW V\VWHPV IRU
the national economy, hereinafter payment
system means LVPS in this chapter, if not
RWKHUZLVHVSHFL¿HG
2
TARGET (Trans-European Automated Real-
time Gross settlement Express Transfer)
system. TARGET links the RTGS systems
o f E U c o u n t r i e s t o f a c i l i t a t e t h e c r o s s - b o r d e r
settlement of Euro. Only RTGS systems
were permitted to be linked to TARGET
system because TARGET was designed as
a RTGS system as a whole.
3
Hybrid means something that consists of or
comes from a mixture of two or more other
things.
4
Centrale des Règlements Interbancaires.
Created in January 1995, CRI manages the
PNS. The shareholders of CRI are French
credit institutions and Banque de France.
5
The concept of offsetting was adopted by
RTGS
plus
¿UVWWLPHHYHULQWKHZRUOG

6
The BOJ-NET comprises two systems: A
system for funds transfer (BOJ-NET Funds
Transfer System) and a system for the
settlement of Japanese Government Bonds
(BOJ-NET JGB Services). In this chapter,
BOJ-NET Funds Transfer System (FTS) is
referred simply as BOJ-NET.
7
 -%$ LV D SUHPLHU ¿QDQFLDO RUJDQL]DWLRQ
whose members consist of banks and bank-
ers association in Japan. The Association
had 249 members at the end of 2006. JBA
is involved in the planning of some clearing
systems. The Tokyo Bankers Association
(TBA), the biggest regionally based bankers
association and one of the Special Members
of JBA, operates the Zengin System and the
FXYCS. As the secretariat of TBA is the
same as that of JBA, JBA is the substantial
operator of the two clearing systems.
8
Reasons to set up independent LSF account
include the considerations for transaction
processing performance and for smooth
system development.
9
Participants can extend the operating hours
until 19:00 with permission from the
BOJ.

10
Foreign Exchange and Foreign Trade Con-
trol Law used to strictly restrict the foreign
exchange transactions. In 1996, the law was
drastically revised and foreign exchange
transaction was fully deregulated.
11
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¿QLVKHVDWWKHHQGRIWKHQH[W0DUFK
This work was previously published in Cyberlaw for Global E-business: Finance, Payments, and Dispute Resolution, edited
by T. Kubota, pp. 109-127, copyright 2008 by Information Science Reference (an imprint of IGI Global).