Wholesale Payments and Financial Discipline, Efficiency, and Liquidity

Author/Editor:

D. F. I. Folkerts-Landau

Publication Date:

November 1, 1997

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 1997/154

Subject:

Asset and liability management Banking Financial institutions Financial markets Government securities Liquidity Payment systems Real time gross settlement systems Securities

English

Publication Date:

November 1, 1997

ISBN/ISSN:

9781451857191/1018-5941

Stock No:

WPIEA1541997

Pages:

27

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