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Predicting Payment Migration in Canada

Anneke Kosse, Zhentong Lu and Gabriel Xerri

Staff Working Papers from Bank of Canada

Abstract: Canada currently has two core payment systems for processing funds transfers between financial institutions: the Large Value Transfer System (LVTS) and the Automated Clearing Settlement System (ACSS). These systems will be replaced over the next years by three new systems: Lynx, the Settlement Optimization Engine (SOE) and the Real-Time Rail (RTR). We employ historical LVTS and ACSS data to predict the demand for the future systems. The results show that small-value LVTS payments will likely migrate to SOE. Also, in the short run, about CAD 10,000 billion of LVTS and ACSS payments (per year) is anticipated to migrate to the RTR if not subject to maximum transaction values. These migration patterns raise important policy questions, such as whether the future systems should be subject to value caps and/or higher collateral requirements.

Keywords: Financial institutions; Financial services; Financial stability; Financial system regulation and policies; Payment clearing and settlement systems (search for similar items in EconPapers)
JEL-codes: C3 E4 E42 G1 G2 G28 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2020-09
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:20-37

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