The Exchange Settlement Account System (ESAS) is New Zealand’s principal high-value payments system for enhancing transaction finality.
ESAS provides an efficient and safe process for real-time electronic settlement of payments between account holders (financial organisations). It is owned and operated by the Reserve Bank of New Zealand - Te Pūtea Matua (RBNZ) on a cost-recovery basis.
RBNZ has provided ESAS as a real-time gross settlement system (RTGS) since 1998 and has established a legal and contractual environment for ESAS that ensures — as far as possible — settlements using ESAS are final and irrevocable at the point when they occur.
We publish an annual report for ESAS.
Section 32 of the Reserve Bank Act 1989 allows us to provide settlement account services for financial institutions.
Exchange settlement accounts are basic current accounts only. An account holder can conduct settlements with other account holders in central bank funds, which lets the receiver of those funds have absolute faith in the quality of the funds received. However:
- No credit is provided. The account must be in funds at all times.
- We calculate interest for each account holder on a daily basis based on the overnight balance. Account holders receive the overnight deposit rate (at or near the official cash rate) on balances up to a maximum balance that we determine. Balances in excess of this amount are remunerated at the official cash rate less zero basis points. We may from time to time vary these arrangements.
- There is no right of access to lender of last resort (LLR) facilities and intra-day or inter-day liquidity. Access to intra and inter-day liquidity is a separate decision based on the creditworthiness criteria used to determine acceptable domestic counterparties.
- No other rights or status are conferred.
There are 3 primary interfaces which are used by ESAS account holders to submit payment instructions to ESAS:
- Via the SWIFT system where members of the Assured Value Payment (AVP) closed user group use ESAS to pay other members of that closed user group. RBNZ administers the AVP closed user group.
- Via the SWIFT system where members of the Settlement Before Interchange (SBI) closed user group use ESAS to pay other members of that closed user group. Payments NZ is the administrator of the SBI closed user group. Once an SBI settlement has been effected in ESAS, a confirmation is sent to SWIFT which then allows an associated interchange file containing underlying payment details to be released to the destination bank.
- Directly from the NZClear system. NZClear is New Zealand's central securities depository and the main securities settlement platform for the financial services industry. ESAS settles the cash component of a trade that settles across NZClear. RBNZ operates NZClear.
Payments NZ develops and manages the rules and standards that govern the clearing systems that use ESAS technology and infrastructure. Access to an ESAS account is separate from access to a clearing system operated by Payments NZ.
You can find more information about Payments NZ clearing systems on the Payments NZ website.
ESAS is a designated settlement system under clause 4 of Schedule 1 of the Financial Market Infrastructures Act 2021 (previously Part 5C of the Reserve Bank of New Zealand Act 1989). It is designated as a systemically important Financial Markets Infrastructure (FMI). Designation also gives legislative backing to the finality of settlements effected in accordance with the rules of the system.
RBNZ’s Prudential Supervision Department are the regulators of ESAS. We have controls to ensure our Payment Services Directorate and Prudential Supervision Department operate at arm's length.
Each ESAS participant has an exchange settlement account with us. All exchange settlement accounts are governed by ESAS rules.