Payment Systems, Multiple Types of Collateral, Banking, and Collateral Policy

Hyung Sun Choi

Korean Economic Review, 2023, vol. 39, 469-493

Abstract: A monetary model is constructed to explore the real effects of multiple collateral requirements for credit settlements on the choice of cash and credit, banking activity, and consumption. Money serves not only as the means of payments but as the means of settlements. A collateral policy may be welfare-improving in a steady-state equilibrium when the nominal interest rate is positive. Reducing cash-collateral requirements increases the amount of cash as the means of payments and consumption with cash but adds up the cost of foregone interest. The optimal collateral policy is to balance out the marginal benefit and cost of holding cash.

Keywords: Payment Systems; Collateral; Reserves; Banking; Collateral Policy (search for similar items in EconPapers)
JEL-codes: E42 E44 E50 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-20230701-39-2-06.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kea:keappr:ker-20230701-39-2-06

Access Statistics for this article

Korean Economic Review is currently edited by Kyung Hwan Baik

More articles in Korean Economic Review from Korean Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by KEA ().