Net Send Limits in the Lynx Payment System: Usage and Implications

Virgilio B Pasin and Anna Wyllie

No 2025-13, Discussion Papers from Bank of Canada

Abstract: The net send limit (NSL) tool allows financial institutions in the Lynx payment system to control their intraday payment outflow levels. While other liquidity management tools and strategies in Lynx have been studied extensively, no prior research has been conducted on how system participants use NSLs. We analyze data on Lynx NSLs, payments and settlement times and find that participants adopt a “set it and forget it” approach to scheduling NSLs. As well, participants have distinct intraday “loosening” and “tightening” behaviours with different timing and impacts on payment delays. We discuss two potential reasons for this behaviour: signalling to counterparties and rational inattention.

Keywords: Financial institutions; Payment clearing and settlement systems; Recent economic and financial developments (search for similar items in EconPapers)
JEL-codes: C10 D82 E42 E58 G21 G41 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2025-11
New Economics Papers: this item is included in nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.34989/sdp-2025-13 Abstract (text/html)
https://www.bankofcanada.ca/wp-content/uploads/2025/11/sdp2025-13.pdf Full text (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:bca:bocadp:25-13

Access Statistics for this paper

More papers in Discussion Papers from Bank of Canada 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada. Contact information at EDIRC.
Bibliographic data for series maintained by ().