Illiquidity in the Interbank Payment System Following Wide-Scale Disruptions

Material TypeArticleLanguageEnglish
TitleIlliquidity in the Interbank Payment System Following Wide-Scale Disruptions Author(S)MORTEN L BECH (Author)
Abstract  We show how the interbank payment system can become illiquid following wide-scale disruptions. Two forces are at play in such disruptions—operational problems and changes in participants’ behavior. If the disruption is large enough, hits a key geographic area, or hits a “too-big-to-fail” participant, then the smooth processing of payments can break down, and central bank intervention might be required to reestablish the socially efficient equilibrium ...Paginationp903–929
SubjectEconomicsDescriptorsEconomics
Journal TitleJournal of Money, Credit, and Banking  
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