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Clearing arrangements in the United States before the Federal Reserve System


  • Warren E. Weber


This paper examines two different clearing arrangements for bank liabilities. One was a profit-maximizing private entity, the Suffolk Banking System. It cleared notes for New England banks between 1827 and 1858. The other was a nonprofit collective, the clearinghouses organized in many cities beginning in 1853. The paper examines how well these arrangements prevented bank failures and acted as lenders of last resort. It finds the Suffolk system had fewer failures but acted less like a lender of last resort. It argues that these differences can be explained by the different incentives facing the Suffolk Bank and the members of clearinghouses.

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  • Warren E. Weber, 2012. "Clearing arrangements in the United States before the Federal Reserve System," Working Papers 695, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmwp:695

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    References listed on IDEAS

    1. Altig,David E. & Smith,Bruce D. (ed.), 2003. "Evolution and Procedures in Central Banking," Cambridge Books, Cambridge University Press, number 9780521814270, November.
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    1. Jaremski, Matthew, 2015. "Clearinghouses as credit regulators before the fed?," Journal of Financial Stability, Elsevier, vol. 17(C), pages 10-21.

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