Clearing, settlement, and monetary policy

Jeffrey Lacker

No 97-01, Working Paper from Federal Reserve Bank of Richmond

Abstract: This paper develops a general equilibrium model of the clearing and settlement of private payment instruments. Spatial separation, heterogeneous preference shocks and limited communication provide a role for private credit as a means of payment. Although this method could be applied to various settlement arrangements, the use of central bank deposit liabilities in settlement is studied here. Various tools of payment system policy, such as intraday overdraft limits and fees, collateral requirements, reserve requirements, and interest on reserves, are examined.

Keywords: Clearinghouses (Banking); Monetary policy (search for similar items in EconPapers)
Date: 1997
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Journal Article: Clearing, settlement and monetary policy (1997)
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