Payment System Settlement and Bank Incentives

COMMITTEE ON PAYMENT AND SETTLEMENT SYSTEMS CORE PRINCIPLES FOR SYSTEMICALLY IMPORTANT PAYMENT SYSTEMS Report of the Task Force on Payment System Principles and Practices BANK FOR INTERNATIONAL SETTLEMENTS

Bank of Canada Oversight Activities during 2007 under the Payment Clearing and Settlement Act

The Bank of Canada has had formal responsibility for the oversight of clearing and settlement systems in Canada since 1996.2 The PCSA gives the Bank of Canada this responsibility for the purpose of controlling systemic risk. In this context, systemic risk is defined as the risk that the default of one participant in a clearing and settlement system could lead, through the activities of the syst...

Bank incentives, contract design and bank runs

We study the Diamond-Dybvig [3] model as developed in Green and Lin [5] and Peck and Shell [7]. We dispense with the notion of a bank as a coalition of depositors. Instead, our bank is a self-interested agent with a technological advantage in recordkeeping. We examine the implications of the resulting agency problem for the design of bank contracts and the possibility of bank-run equilibria. Fo...

Incentives and provider payment methods.

The mode of payment creates powerful incentives affecting provider behavior and the efficiency, equity and quality outcomes of health finance reforms. This article examines provider incentives as well as administrative costs, and institutional conditions for successful implementation associated with provider payment alternatives. The alternatives considered are budget reforms, capitation, fee-f...

Incentives, Communication, and Payment Instruments

Alternative payment instruments are studied in an economy with private information, delayed communication, and limited commitment. Attention is restricted to checks and bank drafts, which differ in resource cost and communication characteristics. Checks are less costly but settlement delays create a limited commitment constraint. We Þnd that drafts dominate at low wealths and checks at higher w...