The welfare effects of a liquidity-saving mechanism

Arbeitspapier

This paper considers the welfare effects of introducing a liquidity-saving mechanism (LSM) in a real-time gross settlement (RTGS) payment system. We study the planner's problem to get a better understanding of the economic role of an LSM and find that an LSM can achieve the planner's allocation for some parameter values. The planner's allocation cannot be achieved without an LSM, as long as some payments can be delayed without cost. In equilibrium with an LSM, we show that there can be either too few or too many payments settled early compared with the planner's allocation, depending on the parameter values.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Staff Report ; No. 331

Classification and Topics

• Classification: Wirtschaft ; Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems ; Central Banks and Their Policies ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: Liquidity-saving mechanisms ; real-time gross settlement ; large-value payment systems

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Atalay, Enghin ; Martin, Antoine ; McAndrews, James
• Event: Veröffentlichung
• (who): Federal Reserve Bank of New York
• (where): New York, NY
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/60752
• Last update: 10.03.2025, 11:41 AM CET