> (seem to remember these transactions are settled instantly interbank at the BoE, so good tech if I have remembered right)
No, participants have nostro/vostro accounts with each other, and payments are immediately settled using those. Participants shuffle money between those, including via accounts at the Bank of England if necessary, to maintain sufficient liquidity; they do that throughout the day, with a big cleanup at the end of the day, but it's not part of the transaction.
Which means that banks need to keep track of their balances with other participants, and not send customers' payments if that would take them overdrawn. Obviously this would be highly undesirable, so they work hard to keep those accounts topped up.
Thank you. I remembered I read something like that. Do you know if it is possible to clear with the central bank instantly? Over short enough timeframes I presume it becomes like trying to hit a moving target.
No, participants have nostro/vostro accounts with each other, and payments are immediately settled using those. Participants shuffle money between those, including via accounts at the Bank of England if necessary, to maintain sufficient liquidity; they do that throughout the day, with a big cleanup at the end of the day, but it's not part of the transaction.
Which means that banks need to keep track of their balances with other participants, and not send customers' payments if that would take them overdrawn. Obviously this would be highly undesirable, so they work hard to keep those accounts topped up.