RIX-RTGS is a Real-Time Gross Settlement-based service. What characterises such a service is that each payment is settled immediately and individually. This differs from a deferred-based service where payments are settled after a certain time span, gross or net. Real-time gross settlement, together with the fact that funds are exchanged on central bank accounts, eliminates credit risks. Further, as RIX also offers intraday loans to banks that temporarily lack funds, liquidity risks are reduced. RIX and its current services have contributed to financial stability and served the Swedish banks well for a number of years. However, the requirements to a modern central bank payment system develop over time. Increasing globalisation leads to growing demands for harmonisation. New functionalities are requested, and more participants raise the operational burden and risks. Also, new types of threats arise, especially related to cyber-attacks, which need special attention in terms of security measures. With this background, the Riksbank recently decided to take preparatory steps towards using the Eurosystem’s future T2 platform for the next generation of RIX. T2 will replace the Eurosystem’s current RTGS system, TARGET2. It will include a number of enhanced services compared to TARGET2 and be based on the global ISO 20022 messaging standard. What is more, like TIPS, T2 will be able to facilitate payments in several currencies – that is, among them perhaps the Swedish krona. T2 will be launched in November 2022. Importantly, as a twin decision, the executive board concluded to initiate a similar process regarding TARGET2-Securities, T2S.

This structural change may have some implications for payment systems and market infrastructures, especially in periods of financial distress. One important implication is that more than ever before, the smooth functioning of the financial system is dependent on the assumption that the option to trade can be exercised even under stressed market conditions. This is a natural consequence of the development of markets and instruments which are actively traded or that are held in the expectation that, should the need arise, they could be traded. Moreover, the new financial environment appears to be more reliant on the immediate availability of funding liquidity. Funding liquidity is critical for the orderly execution of trades and it can become scarce at times of distress, precisely when  3  For further details see Claudio E.V. Borio (2007): Change and constancy in the financial system: implications for financial distress and policy. 4  BIS Review 130/2007  it is most needed, as market participants cut credit lines and/or raise margin requirements to protect themselves against counterparty risks. In conclusion, the stability of the financial system is also dependent on the assumption of ample market liquidity and, most critically, of the smooth functioning of the payment systems and market infrastructures. Second, the complexity of the financial system has greatly increased. This complexity applies not only to individual financial instruments, but also to the financial system as a whole. Its various segments have become more closely interconnected and the linkages across them more opaque.