Liquidity Management

Payments Networks  ·  5 min read

Settlement Liquidity: The Capital Tied Up in Conservative Pre-Funding Is Not Free

Settlement failures are existential risks for a payments network. The response to that risk — conservative pre-funding that ensures liquidity is never the constraint — is operationally sound but financially expensive. Predictive settlement models that forecast intraday liquidity positions with precision reduce the gap between conservative pre-funding and minimum required, producing bankable capital cost savings without increasing settlement risk.