Payments Settlement Under Limited Enforcement: Private Versus Public Systems

Payments Settlement under Limited Enforcement: Private versus Public Systems

What are the benefits provided by a payment system? What are the tradeoffs 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 which allows for an examination and comparison of payment systems, and specification of ...

Payments Systems , Settlement , and Risk ( Preliminary ) ¤

We study two dynamic models of payments systems. The ...rst is a deterministic model with spatial separation where we consider alternative payments systems institutions and their implications for allocation and welfare. A payments system with period-by-period settlement in outside money improves on decentralized exchange using currency by reducing average cash balances and the average holding p...

Settlement Risk in Large-Value Payments Systems

The tremendous growth of payments system use throughout the world has increased both the possibility of settlement failures and the potential impact of such failures. Two decades ago, the risks were relatively low. For example, the daily payment flow of foreign exchange transactions was roughly the same magnitude as the capital stock of a large U.S. bank. In 1996, however, the average daily tur...

Public Enforcement Compensation and Private Rights

Public versus Private Blockchains

Blockchain-based solutions are one of the major areas of research for institutions, particularly in the financial and the government sectors. There is little disagreement that backbone technologies currently used in these sectors are outdated and need an overhaul to conform to the needs of the times. Distributed or decentralized ledgers in the form of blockchains are one of themost discussed po...