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Payments Settlement: Tiering in Private and Public Systems
Author(s) -
KAHN CHARLES M.,
ROBERDS WILLIAM
Publication year - 2009
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2009.00236.x
Subject(s) - payment , settlement (finance) , business , counterparty , variety (cybernetics) , payment system , public economics , actuarial science , finance , economics , computer science , credit risk , artificial intelligence
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.).