Correspondent Banking: Part 1

George Pantelopoulos ()
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George Pantelopoulos: The University of Newcastle

Chapter Chapter 6 in Between Payments and Credit, 2025, pp 81-101 from Springer

Abstract: Abstract This chapter showcases the idea that it is only through a dual-layered financial money system via the central bank acting as the correspondent to the domestic banking system that the drawbacks of the IOU economy can be minimised to the largest extent. This also avoids both “extremes” of single-layered financial money systems—i.e. private deposit banking vs public deposit banking. Following this, the chapter further details the role of the central bank as the correspondent to the domestic financial system by presenting retail payments via financial accounts, and exhibits the differences between settlement in central bank money vs settlement backed by central bank money through the presentation of numerous examples across several dimensions (namely instant vs non-instant payments; deferred net settlement vs real-time gross settlement).

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-96-5384-3_6

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DOI: 10.1007/978-981-96-5384-3_6

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