The impact of payment splitting on liquidity requirements in RTGS

Edward Denbee () and Ben Norman ()
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Ben Norman: Bank of England, Postal: Publications Group Bank of England Threadneedle Street London EC2R 8AH

No 404, Bank of England working papers from Bank of England

Abstract: This paper examines the impact that payment splitting could have upon the liquidity requirements and efficiency of a large-value payment system, such as the United Kingdom’s CHAPS. Using the Bank of Finland Payment and Settlement Simulator and real UK payments data we find that payment splitting could reduce the liquidity required to settle payments. The reduction in required liquidity would increase as the payment splitting threshold decreased but the relationship is non-linear. Liquidity savings are not homogeneously distributed, with some banks benefiting more than others.

Keywords: Payment systems; simulations; payment splitting; liquidity-saving mechanisms (search for similar items in EconPapers)
JEL-codes: C63 E42 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2010-10-28
New Economics Papers: this item is included in nep-ban
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0404

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