The latest edition of
the Federal Reserve Bank of New York’s Economic
Policy Review is available, featuring a new
article, Economizing
on Liquidity with Deferred Settlement Mechanisms,
and including three other articles released earlier
this year.
Economizing on Liquidity with Deferred
Settlement Mechanisms
Authors Kurt Johnson, James J. McAndrews and Kimmo
Soramaki evaluate the effectiveness of alternative
methods of settling Fedwire payments to reduce
intraday credit risk. Credit extensions to banks
using the Fedwire Funds Service – the Federal
Reserve’s real-time gross settlement (RTGS)
payments system – can reach intraday peaks
as high as $86 billion. The authors simulate three
deferred settlement mechanisms that complement
RTGS systems. Preliminary results suggest that
one mechanism, the receipt-reactive gross settlement
(RRGS) system, operating in conjunction with RTGS,
could significantly reduce daylight credit extensions
while only modestly delaying the average time of
payment. The RRGS mechanism bases the settlement
of a bank’s payments on the value of its
receipts over a given time, rather than on the
bank’s balance. The authors believe that
further investigation of enhanced payments systems
is warranted to help inform policymakers about
banks’ potential response to payments system
modifications.
Kurt Johnson is an economist and James J. McAndrews
a vice president at the Federal Reserve Bank of
New York; Kimmo Soramaki is a payment systems policy
expert at the European Central Bank and a research
visitor at the Federal Reserve Bank of New York.
Contents of this volume also include:
Are Home Prices the Next “Bubble”?
By Jonathan McCarthy and Richard W. Peach
June 22, 2004
Are
Home Prices the Next 'Bubble'? ››
The Historical and Recent Behavior of Goods and
Services Inflation
By Richard W. Peach, Robert Rich, and Alexis Antoniades
May 13, 2004
The
Historical and Recent Behavior of Goods and Services
Inflation ››
Origins of the Federal Reserve Book-Entry System
By Kenneth D. Garbade
October 19, 2004
Origins
of the Federal Reserve Book-Entry System ››
Economizing
on Liquidity with Deferred Settlement Mechanisms
››
Contact:
Linda Ricci
(212) 720-6143
linda.ricci@ny.frb.org
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