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The payment system benefits of high reserve balances

The policy measures taken since the financial crisis have greatly expanded the size of the Federal Reserve?s balance sheet and have thus raised the level of aggregate bank reserves as well. Over the same period there has been a significant shift in the timing of payments made over the Federal Reserve?s Fedwire Funds Service toward earlier settlement. This paper documents this timing change and presents regression results suggesting that the increase in overall reserve balances explains the vast majority of this development. The paper also discusses the benefits of high aggregate reserve ...
Staff Reports , Paper 779

Journal Article
Recent developments in wholesale payments systems

Wholesale payments and settlement systems in G-10 countries have undergone significant change in recent years. Notably, central banks have sought to increase the safety and reliability of these systems. In this article, William R. Emmons describes two approaches that have been pursued. Significant progress has been achieved in strengthening (or "securing") many existing payments system arrangements based on net settlement. In addition, many new gross settlement systems have been created, and existing ones have been improved. The article also explores why private-sector financial ...
Review , Issue Nov , Pages 23-43

Journal Article
Creating an integrated payment system: the evolution of Fedwire

Adapted from remarks given before the Seminar on Payment Systems in the European Union in Frankfurt, Germany, on February 27, 1997.
Economic Policy Review , Volume 3 , Issue Jul , Pages 1-7

Journal Article
Changes in the timing distribution of Fedwire funds transfers

The Federal Reserve's Fedwire funds transfer service - the biggest large-value payments system in the United States - has long displayed a peak of activity in the late afternoon. Theory suggests that the concentration of late-afternoon Fedwire activity reflects coordination among participating banks to reduce liquidity costs, delay costs, and credit risk; as these costs and risk change over time, payment timing most likely will be affected. This article seeks to quantify how the changing environment in which Fedwire operates has affected the timing of payment value transferred within the ...
Economic Policy Review , Volume 14 , Issue Sep , Pages 83-112

Journal Article
The rise of electronic payments networks and the future role of the Fed with regard to payment finality

Economic Review , Issue Mar , Pages 1-22

Conference Paper
Payment risk, network risk, and the role of the Fed


Conference Paper
Developments in the dollar payments system


Journal Article
Economizing on liquidity with deferred settlement mechanisms

Credit extensions to banks using the Fedwire Funds Service-the Federal Reserve's real-time gross settlement (RTGS) payments system-can reach intraday peaks as high as $86 billion. This article evaluates the effectiveness of alternative methods of settling Fedwire payments in reducing intraday credit extensions. The authors simulate three deferred settlement mechanisms that complement RTGS systems: one-hour netting, six-hour netting, and a mechanism called a receipt-reactive gross settlement (RRGS) system. Their results suggest that in conjunction with RTGS systems, the RRGS mechanism could ...
Economic Policy Review , Issue Dec , Pages 51-72

Evaluating the quality of fed funds lending estimates produced from Fedwire payments data

A number of empirical analyses of interbank lending rely on indirect inferences from individual interbank transactions extracted from payments data using algorithms. In this paper, we conduct an evaluation to assess the ability of identifying overnight U.S. fed funds activity from Fedwire payments data. We find evidence that the estimates extracted from the data are statistically significantly correlated with banks' fed funds borrowing as reported on the FRY-9C. We find similar associations for fed funds lending, although the correlations are lower. To be conservative, we believe that the ...
Staff Reports , Paper 629

Journal Article
Delay in the expansion of operating hours for Fedwire on-line transfers announced

Federal Reserve Bulletin , Issue Feb , Pages 114-115


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