Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/53816
Authors: 
Chapman, James
Chiu, Jonathan
Molico, Miguel
Year of Publication: 
2008
Series/Report no.: 
Bank of Canada Working Paper 2008,12
Abstract: 
This paper develops a model of settlement system to study the endogenous structure of settlement networks, and the welfare consequences of clearing agent failure. The equilibrium degree of tiering is endogenously determined by the cost structure and the information structure. The degree of tiering is decreasing in the fixed cost of operating the second-tier network and the availability of public credit history. Furthermore, the welfare effects of clearing agent failure can be decomposed into operational inefficiency and the loss of private information.
Subjects: 
Payment, learing, and settlement systems
JEL: 
E42
E58
G21
Document Type: 
Working Paper

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