Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212009 
Authors: 
Year of Publication: 
2005
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 11/2005
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This paper presents a model depicting cross-border payment systems as a mixed oligopoly.A private net settlement system that maximises profit competes with the central banks' gross settlement system that maximises welfare.It may be optimal for the central bank system to encourage increased use of the private system by charging fees that exceed the marginal cost.The central bank system is not only a competitor but also an essential service provider, because central bank money is needed for net settlement of payments in the private system.In some cases the central bank system can paradoxically induce the private system to charge lower fees by making it expensive to use central bank money for settlement purposes.
Subjects: 
payment systems
network economics
mixed oligopolies
JEL: 
L13
L44
F36
G29
Persistent Identifier of the first edition: 
ISBN: 
952-462-212-2
Document Type: 
Working Paper

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