The Effects of Settlement Methods on Liquidity Needs: Empirical Study based on Funds Transfer Data

Saiki Tsuchiya
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Saiki Tsuchiya: Bank of Japan

No 13-E-2, Bank of Japan Working Paper Series from Bank of Japan

Abstract: The level of intraday liquidity needed for settlement varies according to settlement methods. This paper is an empirical study based on funds transfer data in Japan of the effects of the shift from deferred net settlement (DNS) to real time gross settlement (RTGS) with liquidity-saving features (LSF) on the liquidity for settlements of payments among financial institutions. The study has revealed the following: (1) The extent to which liquidity financial institutions put into their accounts for settlement has increased due to the shift to RTGS; (2) the level of the liquidity which was not used for settlements; (3) the liquidity-saving effects of the LSF in an accommodative monetary environment under the zero-interest rate policy; (4) the extent to which the liquidity-saving effects have increased by the uniform application of LSF to different types of transactions; and (5) the extent to which the collateral requirements have declined as a result of the reduction in transactions settled on a DNS basis.

Date: 2013-02-25
New Economics Papers: this item is included in nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:boj:bojwps:13-e-2

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