Collateral Policy in a World of Round-the-Clock Payment

Charles Kahn

Working Papers from University of Illinois at Urbana-Champaign, College of Business

Abstract: This paper examines competition between private and public payments settlement systems, and examines the consequences of round-the-clock private payments arrangements on the competitiveness of public systems. Central to the issue is the role of collateral both as a requirement for participation in central bank sponsored payments arrangements and as the backing for private intermediary arrangements. The presence of private systems serves as a check on the ability of a monetary authority to tighten monetary policy. Round-the-clock systems are an example of a collateral saving innovation that further pressures central bank pre-eminence in payments settlement.

Date: 2009-10
New Economics Papers: this item is included in nep-cba and nep-mon
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ecl:illbus:10-0100

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