Recent work at the Bank of Canada studied the impact of default in Canada's large-value payments system, and concluded that participants could readily manage their potential losses (McVanel 2005). In an extension of that work, the authors use a much larger set of daily payments data - with three times as many observations - to examine the simulated losses of private sector participants and the Bank from defaults in the payments system. They also gauge the upper bound of possible losses in the period April 2004 to April 2006. The authors conclude that losses from a participant failure in the large-value payments system are very likely to be small and readily manageable, as in McVanel (2005). For one or two small participants, under some (probably extreme) conditions, losses could be significant, but not solvency threatening. In sum, the risk controls of the large-value payments system allow and encourage participants to keep potential losses manageable.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Bank of Canada in its series Discussion Papers with number
07-5.
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)