Clearing, settlement and monetary policy

This paper develops a general equilibrium model of the clearing and settlement of private payment instruments. Spatial separation, heterogeneous preference shocks and limited communication provide a role for private credit as a means of payment. Although this method could be applied to various settl...

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Bibliographic Details
Published in:Journal of monetary economics 1997-10, Vol.40 (2), p.347-381
Main Author: Lacker, Jeffrey M.
Format: Article
Language:English
Subjects:
Capital market
Central banks
Clearance & settlement
Economic models
Monetary economics
Monetary policy
Payment systems
Studies
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Summary:This paper develops a general equilibrium model of the clearing and settlement of private payment instruments. Spatial separation, heterogeneous preference shocks and limited communication provide a role for private credit as a means of payment. Although this method could be applied to various settlement arrangements, the use of central bank deposit liabilities in settlement is studied here. Various tools of payment system policy, such as intraday overdraft limits and fees, collateral requirements, reserve requirements, and interest on reserves, are examined.
ISSN:0304-3932
1873-1295
DOI:10.1016/S0304-3932(97)00046-9