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Payments Settlement: Tiering in Private and Public Systems

Author

Listed:
  • CHARLES M. KAHN
  • WILLIAM ROBERDS

Abstract

What are the benefits provided by a payment system? What are the trade-offs in public versus private payment systems and in restricted versus open payments arrangements? Modern payment systems encompass a variety of institutional designs with varying degrees of counterparty protection. We develop a framework that allows for an examination and comparison of payment systems, and specification of conditions leading to their adoption. We relate these conditions to the design of present large-value payment systems (Fedwire, CHIPS, TARGET, etc.). Copyright (c) 2009 The Ohio State University No claim to original US government works.

Suggested Citation

  • Charles M. Kahn & William Roberds, 2009. "Payments Settlement: Tiering in Private and Public Systems," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(5), pages 855-884, August.
    • Handle: RePEc:mcb:jmoncb:v:41:y:2009:i:5:p:855-884
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    Cited by:

    1. Hyung Sun Choi, 2025. "Banking, Costly Credit, and Interest Rates with Limited Commitment," Korean Economic Review, Korean Economic Association, vol. 41, pages 111-140.
    2. Craig, Ben & von Peter, Goetz, 2014. "Interbank tiering and money center banks," Journal of Financial Intermediation, Elsevier, vol. 23(3), pages 322-347.
    3. Hiroshi Fujiki, 2013. "Policy Measures to Alleviate Foreign Currency Liquidity Shortages under Aggregate Risk with Moral Hazard," The Japanese Economic Review, Japanese Economic Association, vol. 64(4), pages 504-536, December.
    4. Jan Paulick & Ron Berndsen & Martin Diehl & Ronald Heijmans, 2024. "No more tears without tiers? The impact of indirect settlement on liquidity use in TARGET2," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 51(2), pages 425-458, May.
    5. Evangelos Benos & Gerardo Ferrara & Pedro Gurrola-Perez, 2017. "The impact of de-tiering in the United Kingdom’s large-value payment system," Bank of England working papers 676, Bank of England.
    6. Choi, Hyung Sun, 2023. "Money, payments systems, limited participation, and central banking," The North American Journal of Economics and Finance, Elsevier, vol. 64(C).
    7. Biliana Alexandrova Kabadjova & Anton Badev & Saulo Benchimol Bastos & Evangelos Benos & Freddy Cepeda- Lopéz & James Chapman & Martin Diehl & Ioana Duca-Radu & Rodney Garratt & Ronald Heijmans & Anne, 2023. "Intraday liquidity around the world," BIS Working Papers 1089, Bank for International Settlements.
    8. Ana Lasaosa & Merxe Tudela, 2008. "Risks and efficiency gains of a tiered structure in large-value payments: a simulation approach," Bank of England working papers 337, Bank of England.
    9. Robert Arculus & Jennifer Hancock & Greg Moran, 2012. "The Impact of Payment System Design on Tiering Incentives," RBA Research Discussion Papers rdp2012-06, Reserve Bank of Australia.
    10. repec:upd:utppwp:036 is not listed on IDEAS
    11. repec:upd:utppwp:056 is not listed on IDEAS
    12. Asaf Bernstein & Eric Hughson & Marc D. Weidenmier, 2014. "Counterparty Risk and the Establishment of the New York Stock Exchange Clearinghouse," NBER Working Papers 20459, National Bureau of Economic Research, Inc.
    13. repec:upd:utppwp:032 is not listed on IDEAS
    14. Christine Parlour, 2017. "Making Money: Commercial Banks, Liquidity Transformation and the Payment System," 2017 Meeting Papers 388, Society for Economic Dynamics.
    15. Carlos A. Arango & Freddy H. Cepeda, 2016. "Non-monotonic Tradeoffs of Tiering in a Large Value Payment System," Borradores de Economia 946, Banco de la Republica de Colombia.
    16. repec:upd:utppwp:072 is not listed on IDEAS

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