Central Government Securities Settlement System
Central Government Securities Settlement System in Taiwan
Since the Central Bank of the Republic of China (Taiwan) launched the Central Government Securities Settlement System (CGSS) in September 1997, central government bonds have been issued in book-entry form. In October 2001, treasury bill settlements were added to the system, and treasury bills have been issued in book-entry form since then. The CGSS is a real-time gross settlement system (RTGS) for the issuance, transfer, redemption, and interest payment of central government securities (CGS) in the form of accounting entries on computer records.
Ownership of book-entry central government securities is recorded in a two-tier system of accounts. Only the clearing banks and central government agencies are eligible to have book-entry securities accounts with the Department of the Treasury of the CBC. Individuals and other entities hold securities accounts with clearing banks.
To reduce the settlement risk in interbank transactions of CGS, the CBC introduced the delivery-versus-payment (DVP) mechanism on April 14, 2008. By linking CGSS to the CBC’s Interbank Funds transfer System(CIFS), the DVP mechanism ensures that the delivery of CGS and the payment are made at the same time. At present, except netting transactions of CGS in the over-the-counter (OTC) market, all other interbank settlements of CGS are processed on a DVP basis.