What is it about?
Payment systems play a key role in the financial infrastructure of all modern economies. Participants of payment systems need access to intraday liquidity to fulfill their payment obligations. They do that either using their own funds, which are costly, or recycling incoming payment. In order to rely on incoming payments, banks could delay the settlement of their own payment obligations. From the regulators' point of view it is important to know to what degree participants rely on the payments they receive from others. In Mexico, this is among the first studies that analyze from this perspective the intraday liquidity management of the Real Time Settlement Payment System, SPEI. We examine a data set of transactions from April 7 to May 7, 2010 in order to get insights of the participants' behavior regarding the delay of sending payment orders.
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Why is it important?
Real time settlement of small value payments contributes to economic growth as it stimulates business activities. The paper quantifies the impact of settlement of retail payments through a Large Value Payment System.
Perspectives
Policy makers need reliable metrics to gain insights on the impact small value payments has on the level of liquidity when settled in real time. This study contributes to quantify the extra liquidity needed when those payments are settled through a Large Value Payment System.
Dr Biliana Alexandrova-Kabadjova
Banco de Mexico
Read the Original
This page is a summary of: The Mexican Experience in How the Settlement of Large Payments is Performed in the Presence of a High Volume of Small Payments, SSRN Electronic Journal, January 2012, Elsevier,
DOI: 10.2139/ssrn.2191794.
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