Operational Problems in Banks – Effects on the Settlement of Payments in Norges Bank

Abstract

The settlement process in the Norges Bank settlement system (NBO) will be affected if an operational problem occurs in one of its participating banks. The inability of one bank to send payments may have significant effects on other banks if the stricken bank becomes a liquidity sink in the system. This article presents the results of a large number of simulations used to analyse the robustness of the settlement process to such systemic events.