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Payment networks in a search model of money

Martin, Antoine; Orlando, Michael; Skeie, David - Federal Reserve Bank of New York - 2006

In a simple search model of money, we study a special kind of memory that gives rise to an arrangement resembling a payment network. Specifically, we assume that agents can pay a cost to access a central database that tracks payments made and received. Incentives must be provided to agents to...

Persistent link: https://www.econbiz.de/10005526318

Barriers to network-specific innovation

Martin, Antoine; Orlando, Michael J. - Federal Reserve Bank of New York - 2005

We examine incentives for network-specific investment and the implications for network governance. We model an environment in which participants that make payments over a network can invest in a technology that reduces the marginal cost of using the network. A network effect results in multiple...

Persistent link: https://www.econbiz.de/10005420505

The welfare effects of a liquidity-saving mechanism

Atalay, Enghin; Martin, Antoine; McAndrews, James - Federal Reserve Bank of New York - 2008

settlement (RTGS) payment system. We study the planner's problem to get a better understanding of the economic role of an LSM and …

Persistent link: https://www.econbiz.de/10005420569

Why does overnight liquidity cost more than intraday liquidity?

Bhattacharya, Joydeep; Haslag, Joseph H.; Martin, Antoine - Federal Reserve Bank of New York - 2007

In this paper, we argue that the observed difference in the cost of intraday and overnight liquidity is part of an optimal payments system design. In our environment, the interest charged on overnight liquidity affects output, while the cost of intraday liquidity only affects the distribution of...

Persistent link: https://www.econbiz.de/10005420616

Liquidity-saving mechanisms

Martin, Antoine; McAndrews, James - Federal Reserve Bank of New York - 2007

We study the incentives of participants in a real-time gross settlement system with and without the addition of a liquidity-saving mechanism (queue). Participants in our model face a liquidity shock and different costs for delaying payments. They trade off the cost of delaying a payment against...

Persistent link: https://www.econbiz.de/10005420671

An economic analysis of liquidity-saving mechanisms

Martin, Antoine; McAndrews, James - In: Economic Policy Review (2008) Sep, pp. 25-39

-saving mechanisms (LSMs), tools used in conjunction with real-time gross settlement (RTGS) systems. LSMs give system participants, such … as banks, an option not offered by RTGS alone: they can queue their outgoing payments. Queued payments are released if … as well as quicken settlement. This article analyzes the performance of RTGS systems with and without the addition of an …

Persistent link: https://www.econbiz.de/10005372902

An economic perspective on the enforcement of credit arrangements: the case of daylight overdrafts in Fedwire

Martin, Antoine; Mills, David C. - In: Economic Policy Review (2008) Sep, pp. 161-168

A fundamental concern for any lender is credit risk - the risk that a borrower will fail to fully repay a loan as expected. Thus, lenders want credit arrangements that are designed to compensate them for - and help them effectively manage - this type of risk. In certain situations, central banks...

Persistent link: https://www.econbiz.de/10005372923

Recent evolution of large-value payment systems : balancing liquidity and risk

Martin, Antoine - In: Economic Review (2005) Q I, pp. 33-57

Large-value payment systems have evolved rapidly in the last 20 years, continually striking a balance between providing liquidity and keeping settlement risk under control. Changes to the design or to the risk management policies of such systems were needed, in part, due to the growth in the...

Persistent link: https://www.econbiz.de/10005379699

Barriers to network-specific innovation

Martin, Antoine; Orlando, Michael J. - Federal Reserve Bank of Kansas City - 2004

We consider an environment in which participants make payments over a network and can invest in a technology that reduces the marginal cost of using the network. A network effect results in multiple equilibria; either all agents invest and usage of the network is high or no agents invest and...

Persistent link: https://www.econbiz.de/10005410709

Settlement liquidity and monetary policy implementation—lessons from the financial crisis

Bech, Morten L.; Martin, Antoine; McAndrews, James - In: Economic Policy Review (2012) Mar, pp. 3-20

The U.S. dollar clearing and settlement system received little attention during the recent financial crisis, mainly because it performed reliably, processing record volumes and values of trades made in stressed financial markets. This article shows how Federal Reserve policy measures aimed at...

Persistent link: https://www.econbiz.de/10011027151