The topology of interbank payment flows

Arnold, Jeffrey; Bech, Morten L.; Beyeler, Walter E.; Glass, Robert J.; Soramaki, Kimmo

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The topology of interbank payment flows

Abstract: We explore the network topology of the interbank payments transferred between commercial banks over the Fedwire Funds Service. We find that the network is compact despite low connectivity. The network includes a tightly connected core of money-center banks to which all other banks connect. The degree distribution is scale-free over a substantial range. We find that the properties of the network changed considerably in the immediate aftermath of the attacks of September 11, 2001.

Keywords: Fedwire; Payment systems; Electronic funds transfers; Banking structure;