RIX, the Riksbank’s system for settling payments, can be described as the hub of the Sweden’s payment system in that it handles all payments between banks and other players. Payments are settled in RIX on the principle of real time gross settlement (RTGS). Funds are transferred electronically between the accounts that RIX participants (banks and certain other players) have with the Riksbank. The RTGS principle means that payments are settled one at a time and the transferred funds are immediately available for further payments. Both payments between participants on their own account as well as on behalf of customers are settled through the RIX system. Payments arising from the Riksbank’s own transactions with participants, for instance from securities transactions and the provision of notes and coin, are also settled in RIX.
Since January 1999, payments in euro can also be settled in RIX. The move to Stage Three of Economic and Monetary Union (EMU) on 1 January 1999 involved the introduction of the euro as the single currency of the participating countries and a single monetary policy in the Eurosystem. The Eurosystem refers to countries participating in the third stage of EMU. This term should be distinguished from the European System of Central Banks (ESCB), which comprises all the EU countries.
When the euro was introduced, the national interbank systems in the ESCB were linked together by a common network for the settlement of cross-border payments in euro. The name of this network is TARGET (Trans-European Automated Real-time Gross Settlement Express Transfer System). TARGET is obligatory for payments connected with the single monetary policy and is also available for commercial transactions. Sweden is outside the euro area and is therefore not participating in the single monetary policy but, along with the other non-euro EU countries, its payment system is linked to TARGET. RIX accordingly consists of two parallel systems, one for the settlement of payments in Swedish kronor (K-RIX) and the other for the settlement of euro payments (E-RIX). Participants can choose to belong to either or both of these two systems.
In order to promote the system’s safety and efficiency, the Riksbank can provide intraday credit for the settlement of payments in RIX, though this calls for adequate collateral.