Reserve Bank of Australia Annual Report 2011

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about 10 per cent less than in 2007/08, before the depth of the global financial crisis. By contrast, the number of transactions settled has recovered strongly, and averaged 34 300 on a daily basis during 2010/11. A new daily transaction record was set on 27 April, when 59 846 transactions were settled. The Reserve Bank devotes significant operational resources and undertakes an ongoing program of capital investment to ensure that RITS operates to the extremely high standards of availability and resilience appropriate to its critical importance to the Australian financial system. As part of the RITS capital maintenance program, the infrastructure supporting the RITS user interface was replaced during 2010/11. Work also commenced to replace the SWIFT infrastructure which supports RITS and the Bank’s own high-value payment transactions and that of its official customers. Last year’s annual report described the RITS Low Value Feeder (LVF) project, aimed at introducing new infrastructure for low-value payments. The key components of this work are the provision of the RITS Low Value Clearing Service and Low Value Settlement Service (LVCS and LVSS). The LVCS connects the Reserve Bank to all institutions directly involved in payments clearing using SWIFT and the industry COIN. This enables RITS Members to choose either network to exchange clearing files (for example, in respect of the direct entry system used for payments such as payroll credits) with institutions that have chosen to use the other network. It commenced operations in June 2010. Currently 10 institutions use the LVCS to exchange files for 14 RITS Members. The LVSS builds on the LVCS infrastructure to provide enhanced functionality in three ways. It will: •• enable RITS Members to provide file settlement instructions to RITS, for low-value clearings, by either SWIFT or the COIN, at around the same time as clearing activity takes place between institutions; currently, the settlement instructions for all clearing information exchanged during the day are aggregated and sent to the Reserve Bank on the evening of exchange, prior to settlement across RITS at 9.00 am on the next business day; •• upgrade instructions to a modern message format using the global ISO 20022 messaging standards framework, replacing formats introduced in 1993; and •• allow greater flexibility in the settlement of these instructions by RITS, either at 9.00 am as now, or at intervals during the day of exchange. In April 2011, the Reserve Bank implemented the initial changes to RITS to enable submission and settlement of file settlement instructions. Changes specifically required for 9.00 am Settlement (such as calculation of clearing interest) are targeted to be complete in the fourth quarter of 2011. It is expected that RITS Members who participate in the 9.00 am Settlement will have completed development and testing of the new LVSS settlement instructions with the Reserve Bank in the first quarter of 2012, with the new arrangements becoming fully operational later that year. As noted earlier, the LVSS infrastructure will also support future migration to allow settlement as clearing files are exchanged, rather than on the next day as occurs at present. This reduction of the gap between clearing and settlement will reduce risk and may assist in faster access to funds, particularly when larger value payments are made using the direct entry system. The industry is currently exploring the benefits of such ‘same-day settlement’. The Reserve Bank also provides settlement services for banknote lodgements and withdrawals by commercial banks and for RTGS settlement of (mainly high-value) transactions undertaken by the Bank and its customers, including the Australian Government, overseas central banks and official institutions. In addition, the Bank has used RTGS settlement to provide Centrelink emergency benefit payments where funds were urgently required. As noted earlier, this service was used heavily during the flood crisis in January. 26 Reserve bank of Australia
The number of central banks holding accounts at the Reserve Bank increased from 46 to 49 over the year. The Bank provides these institutions with settlement and safe custody services to settle their Australian dollar transactions. Reflecting increased overseas demand for Australian dollar investments, the amount held in custody by the Bank for these institutions increased by $11.1 billion to $40.9 billion over the year. ANNUAL REPORT 2011 | Banking and Payments 27
Page 1: RESERVE BANK OF AUSTRALIA ANNUAL RE
Page 4 and 5: © Reserve Bank of Australia 2011.
Page 6 and 7: The banking and payments group cont
Page 8 and 9: 4 Reserve bank of Australia
Page 10 and 11: Audit Committee The objectives of t
Page 12 and 13: Roger Corbett AO Member since 2 Dec
Page 16 and 17: Committee’s questioning of the Ba
Page 18 and 19: The Reserve Bank hosts regular conf
Page 20 and 21: Reserve Bank Balance Sheet $ billio
Page 22 and 23: Days 120 100 80 60 40 20 0 Australi
Page 24 and 25: sovereign debt crisis in Europe and
Page 28 and 29: M 250 200 150 100 50 by other users
Page 34 and 35: % Value of Banknotes on Issue Per c
Page 36 and 37: ppm 20 15 10 5 0 04/05 Source: RBA
Page 40 and 41: countries), the main international
Page 42 and 43: appropriate fee; the committed amou
Page 44 and 45: Economic activity in most EMEAP eco
Page 48 and 49: Staff in the State Offices also pla
Page 50 and 51: The Reserve Bank continued to provi
Page 54 and 55: No 50 40 30 20 10 counterfeit exami
Page 56 and 57: expected to reduce energy and water
Page 58 and 59: 4 3 2 1 0 and Securency Internation
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Page 62 and 63: lost. The centrepiece of these arra
Page 64 and 65: The Reserve Bank follows commercial
Page 66 and 67: 62 Reserve bank of Australia Underl
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Page 74 and 75: Balance Sheet - As at 30 June 2011
Page 76 and 77: Statement of Distribution - For the
Page 78 and 79: Cash Flow Statement - For the year
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Notes to and Forming Part of the Fi
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Interest on fixed coupon securities
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Sell repurchase agreements Securiti
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Balances of asset revaluation reser
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Note 2 - Net Profits Interest reven
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Note 4 - Interest Revenue and Inter
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Note 6 - Cash and Cash Equivalents
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Note 10 - Other Liabilities Provisi
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As at 30 June 2011 and 30 June 2010
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Accounting Valuation For financial
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Note 14 - Superannuation Funds (Con
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Market Risk Market risk is the risk
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Credit Risk Credit risk is the pote
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Liquidity Risk Liquidity risk is th
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Maturity Analysis - As at 30 June 2
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As at 30 June 2011 One $M Level Two
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Auditor-General for Australia Austr
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110 Reserve bank of Australia
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Organisational Chart August 2011 Re
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Banking and Payments Group Assistan
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Glossary ACC Asian Consultative Cou
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Reserve Bank of Australia Annual Report 2011

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