Payment Instruments and Collateral in the Interbank Payment System

Hajime Tomura

No 32, UTokyo Price Project Working Paper Series from University of Tokyo, Graduate School of Economics

Abstract: This paper analyzes the distinction between payment instruments and collateral in the interbank payment system. Given the interbank market is an over-the-counter market, decentralized settlement of bank transfers is inefficient if bank loans are illiquid. In this case, a collat- eralized interbank settlement contract improves efficiency through a liquidity-saving effect. The large value payment system operated by the central bank can be regarded as an implicit implementation of such a contract. This result explains why banks swap Treasury secu- rities for bank reserves despite that both are liquid assets. This paper also discusses if a private clearing house can implement the contract.

Pages: 34 pages
Date: 2014-11
New Economics Papers: this item is included in nep-ban and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.price.e.u-tokyo.ac.jp/img/researchdata/pdf/p_wp050.pdf (application/pdf)

Related works:
Journal Article: Payment instruments and collateral in the interbank payment system (2018)
Working Paper: Payment Instruments and Collateral in the Interbank Payment System (2016)
Working Paper: Payment Instruments and Collateral in the Interbank Payment System (2015)
Working Paper: Payment Instruments and Collateral in the Interbank Payment System (2014)
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:upd:utppwp:032

Access Statistics for this paper

More papers in UTokyo Price Project Working Paper Series from University of Tokyo, Graduate School of Economics University of Tokyo 702 Faculty of Economics, The University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo, 113-0033, Japan. Contact information at EDIRC.
Bibliographic data for series maintained by Yayoi Hatano ().