An Efficient Liquidity Savings Mechanism

Darrell Duffie, Srisht F. Singh and Chaojun Wang

No 35679, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Liquidity savings mechanisms (LSMs) reduce the quantity of reserve balances that banks need to process payments. An LSM can mitigate coordination failures in which banks delay their payments to each other because they expect that other banks will do the same. We provide the design and properties of a maximally efficient new form of LSM.

JEL-codes: D47 D60 D70 (search for similar items in EconPapers)
Date: 2026-08
Note: ME
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