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Technology diffusion within central banking: the case of real-time gross settlement

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Morten L. Bech
Bart Hobijn

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Abstract

We examine the diffusion of real-time gross settlement (RTGS) technology across all 174 central banks. RTGS reduces settlement risk and facilitates financial innovation in the settlement of foreign exchange trades. In 1985, only three central banks had implemented RTGS systems, and by year-end 2005, that number had increased to ninety. We find that the RTGS diffusion process is consistent with the standard S-curve prediction. Real GDP per capita, the relative price of capital, and trade patterns explain a significant part of the cross-country variation in RTGS adoption. These determinants are remarkably similar to those that seem to drive the cross-country adoption patterns of other technologies.

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Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 260.

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Date of creation: 2006
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Handle: RePEc:fip:fednsr:260

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Keywords: Banks and banking Central Foreign exchange Technological innovations

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