Norges Bank will introduce a new settlement system for banks on Monday 24 November 1997. In the new system, payments between banks will be settled in Norges Bank continuously throughout the day, replacing the current end-of-day settlement system. Transactions amounting to NOK 100-200bn will be settled daily through this system. Real-time interbank settlement in Norges Bank entails that banks' may now operate payment systems for customers at a considerably lower risk than previously.

The new settlement system entails that banks must manage liquidity throughout the day. Norges Bank will facilitate the banks' liquidity management by offering intraday loans against security. The implementation of the new system will start with an introductory period when conditions are introduced gradually so that banks have some time to adjust.

The new settlement system has been established in close cooperation with the banking sector. The banks and Norges Bank have also worked closely on the development of an information system which will facilitate banks' liquidity and settlement management throughout the day.

Central Bank Governor Kjell Storvik points out that the new settlement system will, to a large extent, help to reduce risk in the Norwegian payment systems, and thereby strengthen the position of the banking sector. The implementation of the new settlement system will bring the Norwegian payment system in line with developments in other countries. The establishment of the system is also in accordance with international recommendations. Such systems are known internationally as RTGS systems. The new system is also a prerequisite if Norway is later to link-up to corresponding systems in other countries as a risk-reducing measure and in order to increase efficiency in cross-border payment systems.

Note to editors: The new settlement system is described in more detail in an article in Norges Bank's quarterly review, Economic Bulletin 3/97.

For further information, please contact Dag-Inge Flatraaker, assistant director, tel. +47 22 31 62 89 or Karin Lohrmann, director, tel. +47 31 66 84, Banking Department, Norges Bank.