The Reform of Wholesale Payment Systems and its Impacton Financial Markets
IMF Working Papers, May 1, 1996
Source details
- Canonical URL
- The Reform of Wholesale Payment Systems and its Impacton Financial Markets
Other formats
Bibliographic details
- Authors: Dirk Schoenmaker, Peter M. Garber, D. F. I. Folkerts-Landau
- Published: May 1, 1996
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451845525.001
Summary
- Reviews ongoing efforts to reduce the risks inherent in the world’s principal wholesale payment systems.
- Assesses major policy proposals to contain the growth in intraday credit exposures in:
- net settlement wholesale payment systems, and
- real-time gross systems in which the central bank provides daylight overdrafts.
- Discusses benefits of risk-management policies.
- Assesses adverse impact on liquidity in financial markets of:
- applying interest charges for intraday central-bank credit, and
- collateralizing intraday central-bank credit.
Assessment of Policy Proposals
- Focus on containing growth in intraday credit exposures arising from:
- net settlement wholesale payment systems, and
- RTGS (real-time gross settlement) systems with central-bank daylight overdrafts.
- Major policy proposals evaluated (as described in the paper):
- Imposing interest charges on intraday central-bank credit.
- Requiring collateralization of intraday central-bank credit.
- Other risk-management measures intended to reduce systemic exposures in wholesale payment systems.
Benefits of Risk-Management Policies
- Risk-management policies are presented as reducing inherent risks in wholesale payment systems by containing intraday credit exposures.
- Expected benefits include strengthening the resilience of payment and settlement systems and reducing systemic risk associated with payment flows and payment traffic.
Adverse Impacts on Market Liquidity
- The paper assesses potential adverse effects on liquidity in financial markets from:
- Applying interest charges for intraday central-bank credit.
- Collateralizing intraday central-bank credit.
- These measures can increase the opportunity cost of using intraday credit and affect market functioning in government securities and money markets.
Subject Areas and Keywords
- Subject: Banking, Collateral, Financial institutions, Financial markets, Government securities, Payment systems, Real time gross settlement systems, Securities
- Keywords: Collateral, Europe, Global, government securities, money market, opportunity cost, payment flow, payment pattern, payment system, payment system charge, payment system liquidity, Payment systems, payment traffic, payments problem, Real time gross settlement systems, RTGS payment system, Securities, securities transaction, settlement system, system liquidity, treasury securities, WP