While RTGS systems settle payments instantly, they require high levels of reserve cash. To reduce reserve usage, retail networks frequently deploy Deferred Net Settlement (DNS) systems. [1, 2]

DNS networks accumulate transaction instructions throughout the operating day, calculating a single net position for each participant bank at a designated closing time: [1]

Bank Alpha sends 10,000 to Bank Beta -> Bank Beta sends 8,000 to Bank Alpha -> End-of-Day Net Obligation: Bank Alpha pays 2,000 to Bank Beta

This structural netting reduces the volume of liquid reserves banks must hold to clear daily flows. However, it introduces significant Liquidity Risk and counterparty default risk: if a participant bank fails at closing before settling its net obligations, the entire DNS network can experience gridlock, forcing the central bank to intervene to prevent broader interbank defaults.