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Quantifying the benefits of a liquidity-saving mechanism


  • James J. McAndrews
  • Antoine Martin
  • Enghin Atalay


This paper attempts to quantify the benefits associated with operating a liquidity-saving mechanism (LSM) in Fedwire, the large-value payment system of the Federal Reserve. Calibrating the model of Martin and McAndrews (2008), we find that potential gains are large compared to the likely cost of implementing an LSM, on the order of hundreds of thousands of dollars per day.

Suggested Citation

  • James J. McAndrews & Antoine Martin & Enghin Atalay, 2010. "Quantifying the benefits of a liquidity-saving mechanism," Staff Reports 447, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednsr:447

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    Cited by:

    1. Saiki Tsuchiya, 2013. "The Effects of Settlement Methods on Liquidity Needs: Empirical Study based on Funds Transfer Data," Bank of Japan Working Paper Series 13-E-2, Bank of Japan.
    2. Morten L. Bech & James J. McAndrews & Antoine Martin, 2012. "Settlement liquidity and monetary policy implementation—lessons from the financial crisis," Economic Policy Review, Federal Reserve Bank of New York, issue mar, pages 3-20.

    More about this item


    Payment systems; Fedwire; Liquidity (Economics); Federal Reserve System;

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