Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100816
Authors: 
Kahn, Charles M.
Roberds, William
Year of Publication: 
1999
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 98-21a
Abstract: 
Using a neoclassical monetary model, we investigate the welfare cost of a payment system that operates as a real-time gross settlement (RTGS) system. We illustrate how the cost of such systems does not ultimately derive from factors such as "payments gridlock" but instead from the credit constraints imposed by RTGS. We also investigate the welfare consequences of various approaches to the allocation of daylight credit by central banks. The two most popular approaches, collateralization and charging an administered intraday interest rate, are shown to be effective along some dimensions but flawed in others.
Subjects: 
Money
Payment systems
Document Type: 
Working Paper

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