Wholesale Payments and Financial Discipline, Efficiency, and Liquidity

D. Folkerts-Landau

No 1997/154, IMF Working Papers from International Monetary Fund

Abstract: Properly designed wholesale payments system can make a significant contribution to enhancing market discipline in the financial sector, reducing the risk of systemic disturbance and permitting a less extensive safety net for financial institutions. The objective of these reforms has been to achieve a reduction of the credit risk associated with the growth in intraday credit exposures that arises in net settlement systems and in real-time gross systems when the central bank provides daylight overdrafts. Intraday payments-related credit in net settlement systems has been reduced by restructuring payment systems into real-time gross settlement systems with collateralized overdrafts, while in the existing real-time gross settlement systems, the risk-abatement program currently in effect has taken the form of caps and charges on uncollateralized daylight credit.

Keywords: WP; payment system; government securities; Treasury security liquidity; daylight overdraft; securities transaction; treasury securities; Payment Systems; Monetary Policy; Banking; payments problem; reform effort; overdraft charge; Fed from Treasury security trading; payment system charge; credit exposure; wholesale payment system; interbank payment; payment traffic; Real time gross settlement systems; Securities; Liquidity; Europe; Global (search for similar items in EconPapers)
Pages: 27
Date: 1997-11-01
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Citations: View citations in EconPapers (6)

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