Payments Settlement: Tiering in Private and Public Systems |
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| Authors: | CHARLES M KAHN WILLIAM ROBERDS† |
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| Institution: | Charles M. Kahn; is a Professor, Department of Finance, University of Illinois (E-mail: ). William Roberds; is a Research Economist and Policy Advisor, Research Department, Federal Reserve Bank of Atlanta (E-mail: ). |
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| Abstract: | What are the benefits provided by a payment system? What are the trade‐offs in public versus private payment systems and in restricted versus open payments arrangements? Modern payment systems encompass a variety of institutional designs with varying degrees of counterparty protection. We develop a framework that allows for an examination and comparison of payment systems, and specification of conditions leading to their adoption. We relate these conditions to the design of present large‐value payment systems (Fedwire, CHIPS, TARGET, etc.). |
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| Keywords: | E42 G21 |
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