Interbank funds transfer settlement systems
In Brazil, there exist four interbank funds transfer settlement systems:
•Reserves Transfer System (Sistema de Transferência de Reservas) – STR;
•Funds Transfer System (Sistema de Transferência de Fundos) – Sitraf;
•Deferred Settlement System for Interbank Credit Orders (Sistema de Liquidação Diferida das Transferências Interbancárias de Ordens de Crédito) - Siloc;
•Centralizer Clearance for Checks (Centralizadora da Compensação de Cheques) – Compe.
STR is the settlement hub for interbank operations, since it settles transfers originated in its own system and, furthermore, it provides final settlement for the obligations of the other systems which make up the Brazilian Payment System. It is important to highlight that all funds transfers between accounts held at the Banco Central do Brasil are carried out by means of this system.
In order to improve the smooth functioning of payments, the Banco Central do Brasil grants to financial institutions holding Bank Reserves Accounts intraday credit using repo transactions with government securities, free of charge, i.e., the price of the return operation is equal to the price of the outgoing one. Furthermore, balances at the end of the day are used to verify the banks’ compliance with reserves requirements, so these funds can be freely used throughout the day to settle obligations in the payments system.