August 2004
CHAPTER III GROWTH AND DEVELOPMENT OF THE BI-RTGS SYSTEM
In view
of the
extensive coverage
of the
BI-RTGS system, at some point almost all financial transactions in
Indonesia are certain to pass through the system. Therefore according
to the
criteria established
by the
Bank for
International Settlements
BIS, the
BI-RTGS system
is classified
as a
Systemically Important
Payment System
SIPS. Specifically,
the BI-RTGS
system meets
the SIPS
criteria in the following areas:
1.
The BI-RTGS system processes a very high turnover and volume of transactions.
2.
The range of transactions covered by the BI-RTGS system is
very broad,
and the
system therefore
processes settlement
for most
of Indonesia’s
financial transactions.
3. The
high turnover
passing through
the BI-RTGS
system means that any system failure will inevitably transmit
serious shocks to Indonesia’s financial markets.
3.1. Position of the BI-RTGS System in the National Payment System
The Bank Indonesia Real Time Gross Settlement system is an interbank funds transfer system using a real time online
mechanism for bank and customer transactions with settlement performed on an individual transaction basis. As a rule, the
BI-RTGS system handles high value and urgent transactions.
August 2004
Examples of high value transactions include government transactions,
interbank money
market transactions,
forex transactions,
securities trading
and transactions
in large
amounts as
specified by
Bank Indonesia.
At this
time, a
transaction can be categorised as high value if the amount is Rp 100 million or more. Additionally, the BI-RTGS system
can process
settlement of
urgent retail
transactions. The
definition of urgent is normative, in which the amount of a transaction classified urgent is left to the discretion of
the BI-RTGS system user, whether Bank Indonesia as operator or
bank as
member. Retail
transactions that
may be
categorised as
urgent include
transactions involving
clearing results
and customer
transactions in
amounts of
less than Rp 100 million. Since
the launching
of the
BI-RTGS system
on 17
November 2000,
volume and
turnover has
grown steadily
in keeping with the growth in the national economy and expanded
scope of transactions processed through the system. In 2001, the
first year
of operation,
daily turnover
reached 46
trillion rupiahs
in 4,200
transactions. Subsequently
in 2002, turnover climbed 11 percent to a daily overage of 56
trillion rupiahs
in 8,800
transactions. The
system subsequently
underwent further
expansion in
scope of
transactions and geographical coverage. In 2003, the BI-RTGS system
began processing
the clearing
settlement of
ATM
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transactions and
was launched
at Bank
Indonesia Regional
Offices. Activity
again soared,
with turnover
reaching an
average of Rp 80 trillion in 17,000 transactions each day. The following graph presents the general trend in BI-
RTGS transactions over a one year period, including growth in turnover and number of transactions during 2003:
The trend
in BI-RTGS
system transactions
during 2003
points to
a seasonal
or cyclical
pattern over
a one
year period.
Monthly observations
reveal certain
periods of
an increase or surge in volume and turnover in comparison to
other periods,
indicating that
transactions are
seasonal. The sharp rise in BI-RTGS system transactions each December
is a result of increased government-related transactions in
- -
Daily Turnover and RTGS Transaction Volume, 2003
35,000 30,000
25,000 20,000
15,000 10,000
5,000 250
200 150
100 50
Volume Turnover
August 2004
response to the settlement of liabilities to the government and transactions for settlement of liabilities to banks and
customers, which commonly fall due in December. Turnover for December 2003 was recorded at Rp 2,879 trillion in 416,513
transactions. By
comparison, monthly
average turnover
for January-November
was Rp
1,641 trillion
in 340.531
transactions. Furthermore,
if transactions
are observed
daily, the
pattern in the BI-RTGS system is cyclical, because there are certain periods that consistently report higher volume and
turnover compared
to other
periods. High
turnover occurs
every Thursday,
as this
is the
day for
settlement of
transactions from
the Bank
Indonesia Certificate
auction. Average
turnover on
Thursdays during
2003 was
well above
turnover for
Mondays, Tuesdays,
Wednesdays and
Fridays. Thursdays
averaged turnover
of 128
trillion rupiahs
in 16,695
transactions compared
to the
Monday, Tuesday,
Wednesday and
Friday average
of 75
trillion rupiahs
in 17,224 transactions.
Analysis of transactions during 2003 shows that activity on the BI-RTGS system can be classified into peak times and
normal times. Peak times may be certain months December or days
Thursdays while
normal times
may represent
months January
until November
or days
Mondays, Tuesdays,
Wednesdays and Fridays. The classification into these two
August 2004
periods will be used to analyse down time risk, as described in the following chapter.
3.2. Mechanisms and Operational Risk in the BI-RTGS System
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