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SIC: Switzerland's new electronic interbank payment system

Author

Listed:
  • David L. Mengle
  • Christian Vital

Abstract

It is an article of faith among American bankers and their regulators that some daylight overdrafts are necessary to the efficient functioning of large-dollar wire transfer systems. But the Swiss have injected an element of doubt by developing a system that does away with daylight overdrafts. Their new system processes a payment only if sufficient clearing funds are on deposit in the sending banks reserve account. If sufficient funds are not available, the payment is held in a queue until covering funds have arrived. Vital and Mengle describe the first eighteen months of the systems operation.

Suggested Citation

  • David L. Mengle & Christian Vital, 1988. "SIC: Switzerland's new electronic interbank payment system," Economic Review, Federal Reserve Bank of Richmond, vol. 74(Nov), pages 12-27.
    • Handle: RePEc:fip:fedrer:y:1988:i:nov:p:12-27:n:v.74no.6
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    File URL: https://fraser.stlouisfed.org/files/docs/publications/frbrichreview/rev_frbrich198811.pdf
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    References listed on IDEAS

    as
    1. Richard L. Smoot, 1985. "Billion-dollar overdrafts: a payments risk challenge," Financial Industry Perspectives, Federal Reserve Bank of Kansas City, pages 1-10.
    2. Edward J. Stevens, 1984. "Risk in large-dollar transfer systems," Economic Review, Federal Reserve Bank of Cleveland, issue Fall, pages 2-16.
    3. Terrence M. Belton & Matthew D. Gelfand & David B. Humphrey & Jeffrey C. Marquardt, 1987. "Daylight overdrafts and payments system risk," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Nov, pages 839-852.
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    Citations

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    Cited by:

    1. Dueker, Michael & Fischer, Andreas M., 1996. "Inflation targeting in a small open economy: Empirical results for Switzerland," Journal of Monetary Economics, Elsevier, vol. 37(1), pages 89-103, February.

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    More about this item

    Keywords

    Payment systems; Overdrafts;

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