Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272853 
Year of Publication: 
2022
Series/Report no.: 
Staff Report No. 1040
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
Before the era of large central bank balance sheets, banks relied on incoming payments to fund outgoing payments in order to conserve scarce liquidity. Even in the era of large central bank balance sheets, rather than funding payments with abundant reserve balances, we show that outgoing payments remain highly sensitive to incoming payments. By providing a window on liquidity constraints revealed by payment behavior, our results shed light on thresholds for the adequacy of reserve balances. Our findings are timely, given the ongoing shrinking of central bank balance sheets around the world in response to inflation.
Subjects: 
real-time gross settlement (RTGS) systems
quantitative tightening
balance sheet management
reserve balances
JEL: 
E42
E44
E52
E58
G21
Document Type: 
Working Paper

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