BANKS PROPOSE THEIR SOLUTION FOR REAL-TIME SECURITIES SETTLEMENTS.

Although cash settlement is operating increasingly in real time between banks across Europe, driven by the launch of the single currency, the movement of securities has been hampered by geographical borders, limiting efficiency and increasing risks. Disappointed by attempts to date to make progress, European banks have now come up with what they believe will offer a more effective solution.The European Banking Federation is proposing what it calls Remote Access for collateral management. Under this system, a national central bank could open a securities account in its investor's foreign securities settlement system. It could then exchange for cash any type of investor collateral held in that system or a linked system, by a simple book entry transfer of the securities. The EBF says the concept could allow banks to obtain credit more efficiently, placing their eligible securities in a single pool of assets, independent of the bank's location, for monetary policy operations.The decentralised solutions that have been tried so far have shown their weaknesses, through experience...