Liquidity-saving mechanisms in collateral-based RTGS payment systems
AbstractThis paper studies banks’ incentives regarding the timing of payment submissions in a collateral-based RTGS payment system and how these incentives change with the introduction of a liquidity-saving mechanism (LSM). We show that an LSM allows banks to economise on collateral while also providing incentives to submit payments earlier. This is because in our model an LSM allows payments to be matched and offset in real time without any or very minimal funds. Under a collateral-based RTGS payment system, introduction of the LSM always improves welfare. The result contrasts with earlier work, which shows that under a fee-based RTGS system, the introduction of an LSM in some circumstances may reduce welfare. Copyright Springer-Verlag 2013
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Bibliographic InfoArticle provided by Springer in its journal Annals of Finance.
Volume (Year): 9 (2013)
Issue (Month): 1 (February)
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Web page: http://www.springerlink.com/link.asp?id=112370
Liquidity-saving mechanism; Intraday liquidity; Payments;
Other versions of this item:
- Marius Jurgilas & Antoine Martin, 2010. "Liquidity-saving mechanisms in collateral-based RTGS payment systems," Staff Reports 438, Federal Reserve Bank of New York.
- Jurgilas, Marius & Martin, Antoine, 2010. "Liquidity-saving mechanisms in collateral-based RTGS payment systems," Bank of England working papers 389, Bank of England.
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
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- Clara Lia Machado & Carlos León & Miguel Sarmiento & Orlando Chipatecua, 2010.
"Riesgo Sistémico y Estabilidad del Sistema de Pagos de Alto Valor en Colombia: Análisis bajo Topología de Redes y Simulación de Pagos,"
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