Simulating interbank payment and securities

                  Abstract  The simulation technique provides a new means for analysing complex
    interdependencies in payment and securities settlement processing. The Bank of
    Finland has developed a payment and settlement system simulator (BoF-PSS2)
    that can be used for constructing simulation models of payment and securities
    settlement systems.
    This paper describes the main elements of payment and settlement systems
    (system structures, interdependencies, processing steps, liquidity consumption,
    cost and risk dimensions) and how these can be treated in simulation studies. It
    gives also examples on how these elements have been incorporated in the
    simulator, as well as an overview of the structure and the features of the BoFPSS2
    simulator.
    Key words: simulations, simulator, payment systems, clearing/settlement, and liquidity