The paper aims to familiarise the reader with the operating principles and the effectiveness of the EAF system. Even though it is being replaced by another system (RTGS+) as of September 2001, EAF procedures for the settlement of payment instructions are worth considering. EAF is a modern hybrid system, i.e. it combines the features of a netting and gross settlement system. Owing to this solution, credit, systemic and liquidity risks are considerably reduced and participants' liquidity can be used optimally. This type of system has recently gained in recognition, as it exploits the advantages and eliminates disadvantages of both homogenous systems.

The German EAF (Euro Access Fund) system was created in March 1996 as EAF 2, Elektronischen Abrechnung Frankfurt. The name Euro Access Fund was assumed on 1 January 1999, the day of the euro introduction. Since that time, EAF has been dealing exclusively with euro transactions. The system is operated by Deutsche Bank. EAF handles mostly interbank money market and currency transactions, but it also settles the payments of banks' clients. Additionally, it is the main system for processing cross-border payments, despatched from and received by the system through the branches of foreign banks located in Germany.

The participants of EAF are direct or indirect ones. The participants with no seat in Germany can use the remote access facility EAF is equipped with. This service is available through SWIFT, which supports the operation of the entire EAF system. In order to use EAF as a direct participant, one has to meet access criteria defined by the system's operator. There are 14 Polish banks operating in EAS as indirect participants.

An EAF settlement day comprises two phases. During the first phase, the participants deliver their payment instructions to the system. These are cleared bi- and multilaterally and subsequently settled in a continuous manner, in the order in which they were received. During phase two, payments not settled during the first phase are effected. EAF settles only the payments fully covered by funds on account with Deutsche Bank; any other payments are treated as cancelled. EAF's priority is to use liquidity economically.