The payment system benefits of high reserve balances

Arbeitspapier

The policy measures taken since the financial crisis have greatly expanded the size of the Federal Reserve's balance sheet and have thus raised the level of aggregate bank reserves as well. Over the same period there has been a significant shift in the timing of payments made over the Federal Reserve's Fedwire Funds Service toward earlier settlement. This paper documents this timing change and presents regression results suggesting that the increase in overall reserve balances explains the vast majority of this development. The paper also discusses the benefits of high aggregate reserve balances for the robustness of the payment system and the potential implications for policy going forward.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Staff Report ; No. 779

Classification and Topics

• Classification: Wirtschaft ; Financial Institutions and Services: General ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation
• Subject: Fedwire ; settlement liquidity ; reserves ; monetary policy implementation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): McAndrews, James Joseph ; Kroeger, Alexander
• Event: Veröffentlichung
• (who): Federal Reserve Bank of New York
• (where): New York, NY
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/146678
• Last update: 10.03.2025, 11:44 AM CET