What is one benefit of using DNS payments compared to RTGS?

Using DNS (Deferred Net Settlement) payments offers the benefit of requiring less liquidity for settlement compared to Real-Time Gross Settlement (RTGS) systems. In DNS systems, transactions are settled in batches at specific intervals rather than continuously. This allows financial institutions to manage their liquidity more efficiently, as they do not need to have sufficient funds available at all times to cover each individual transaction. Instead, they can hold a lower overall liquidity balance because they can predict and manage their cash flow more effectively, only needing to settle net amounts across multiple transactions.

This characteristic of DNS systems is particularly advantageous in reducing the burden of maintaining high liquidity levels for operational purposes, thereby allowing participants to allocate their capital more efficiently.