Arbeitspapier
Payment system settlement and bank incentives
In this paper we consider the relative merits of net versus gross settlement of interbank payments. Net settlement economizes on the costs of holding non-interest-bearing reserves but increases moral hazard problems. The "put option" value of default under net settlement can also distort banks' investment incentives. ; Absent these distortions, net settlement dominates gross, although the optimal net settlement scheme may involve a positive probability of default. Net settlement becomes more attractive relative to gross settlement if bank assets have to be liquidated at less than book value.
- Language
-
Englisch
- Bibliographic citation
-
Series: Working Paper ; No. 96-10
- Classification
-
Wirtschaft
- Subject
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Financial institutions
Financial services industry
Payment systems
- Event
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Geistige Schöpfung
- (who)
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Kahn, Charles M.
Roberds, William
- Event
-
Veröffentlichung
- (who)
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Federal Reserve Bank of Atlanta
- (where)
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Atlanta, GA
- (when)
-
1996
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Kahn, Charles M.
- Roberds, William
- Federal Reserve Bank of Atlanta
Time of origin
- 1996
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Payment and securities settlement systems in the accession countries, [Hauptbd.].
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Settlement finality as a public good in large-value payment systems
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