Wholesale Payments and Financial Discipline, Efficiency, and Liquidity

November 1, 1997

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D. F. I. Folkerts-Landau Wholesale Payments and Financial Discipline, Efficiency, and Liquidity, (USA: International Monetary Fund, 1997) accessed December 23, 2024

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.

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

Keywords: Banking, Credit exposure, Daylight overdraft, Europe, Fed from Treasury security trading, Global, Government securities, Interbank payment, Liquidity, Monetary Policy, Overdraft charge, Payment system, Payment system charge, Payment Systems, Payment traffic, Payments problem, Real time gross settlement systems, Reform effort, Securities, Securities transaction, Treasury securities, Treasury security liquidity, Wholesale payment system, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1997/154
Stock No:

WPIEA1541997
ISBN:

9781451857191
ISSN:

1018-5941

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