Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/60752
Authors: 
Atalay, Enghin
Martin, Antoine
McAndrews, James
Year of Publication: 
2008
Series/Report no.: 
Staff Report, Federal Reserve Bank of New York 331
Abstract: 
This paper considers the welfare effects of introducing a liquidity-saving mechanism (LSM) in a real-time gross settlement (RTGS) payment system. We study the planner's problem to get a better understanding of the economic role of an LSM and find that an LSM can achieve the planner's allocation for some parameter values. The planner's allocation cannot be achieved without an LSM, as long as some payments can be delayed without cost. In equilibrium with an LSM, we show that there can be either too few or too many payments settled early compared with the planner's allocation, depending on the parameter values.
Subjects: 
Liquidity-saving mechanisms
real-time gross settlement
large-value payment systems
JEL: 
E42
E58
G21
Document Type: 
Working Paper

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