Algorithms and software for interbank payments clearing
Developer Company: the State Scientific Institution “The United Institute for Informatics Problems of the National Academy of Sciences of Belarus”
Product brief description:
Minimization of banks’ liquidity need during interbank payments is one of the urgent problems, which would increase banking efficiency.
Payment system of the Republic of Belarus consists of two subsystems, the same as in many advanced countries. In one of the subsystems the payments are conducted only by internal funds of banks. In another subsystem only small amount of banks’ internal funds are used. The main driving force there is offset payments. The aim of the first subsystem is conducting the urgent and large payments. The other payments (about 90% of total amount) are conducted by “Other payments clearing” system.
Since relatively small amount of the money reserved by banks is used for clearing, there is no opportunity to conduct all the payments received by clearing subsystem. That is why there is need to create such a subset of payments that would conduct maximum of them using only the internal funds.
The mission is to design the high-speed algorithms and related software to find a possible way to form subsets of the payments conducted. From technical point of view the mission can be solved as NP-complicated. What is more, the problem is not polynomially approximable even when only two banks take part in clearing process.
To form s subset of conducted payments the complex of algorithms is designed and its software support is provided. Description of the designed software is stated below. Analysis is based on the data of the real clearing sessions provided by National bank. The following three situations were analyzed:
All banks’ reserves are zero,
National bank’s reserve is unlimited, but reserves of the rest of the banks are zero,
Clearing sessions’ real reserves.
When all reserves are zero and clearing session payments sum is 25 thousands and more, the percent of conducted payments (total check) is from 73 to 83%. Processing takes from 5 to 20 seconds.
On condition, that National bank’s reserve is unlimited and reserves of the rest of the banks are zero, the percent of conducted payments (total check) is generally from 80 to 90%. Processing takes no more than 20 seconds for almost all cases.
When taking the real reserves of clearing sessions the percent of conducted payments (total check) is generally from 98 to 100%. Average processing takes 1,6 seconds.
Experiments were carried out on PC with Celeron processor (with frequency of 2,4 GHz and RAM of 1 Gb).
Restraint on product field of application:
Number of banks – no more than 100,
Total amount of payments – no more than 700 000,
Number of banks pairs cooperating – no more than 1000.
The program product is designed for Windows package. For product effective running it is recommended to use PC of Pentium4 class or higher with RAM of 1 Gb or more.
The product is highly competitive with the best world analogues.
Field of application:
Subsystem of payments clearing in payment system of country’s central bank or a big region’s central bank.
Development is completed, as well as program and in-line documentation. The product has been implemented in National bank of the Republic of Belarus.
Cooperation: Under contracts.
Product developers provide its installation and adaptation to customer’s conditions, product usage training, methodological and technical support and participation in the further development.
Contact person: Jakov M. Shafranskij tel. +375 17 284-21-25,