. They trade off the cost of delaying a payment against the cost of borrowing liquidity from the central bank. The … liquidity-saving mechanism (queue). Participants in our model face a liquidity shock and different costs for delaying payments … to show that the design of a liquidity-saving mechanism has important implications for welfare, even in the absence of …

We study two designs for a liquidity-saving mechanism (LSM), a queuing arrangement used with an interbank settlement … system. We consider an environment where banks are subjected to liquidity shocks. Banks must make the decision to send, queue … payment from the queue is conditional on the liquidity shock. With a receipt-reactive LSM, a payment is released from the …

-time gross settlement payment system and the way in which these incentives change with the introduction of a liquidity … in which each bank must receive a payment that provides sufficient funds to allow the settlement of its own payment. In …