@MISC{Tomura15paymentinstruments, author = {Hajime Tomura}, title = {Payment Instruments and Collateral in the Interbank Payment System}, year = {2015} }
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Abstract
This paper presents a three-period model to analyze why banks need bank reserves despite the presence of other liquid assets like Treasury securities. The model high-lights the fact that the interbank market is an over-the-counter market. It shows that the large value payment system operated by the central bank can be regarded as a collateralized contract to save liquidity to settle bank transfers. In this interpretation, bank reserves are the balances of collateral. The optimal contract is the
oor system. Whether a private clearing house can replace the central bank depends on the range of collateral it can accept. Email: