Institutional determinants of balance of payment dynamics

Dynamics of Balance of Payment developments are still barely researched. Chapter 1 tries to summarize empirical evidence between institutional determinants and BoP movements and proposes a framework for the role of institutions in a debt cycle. It is found that “good” institutions do help a country to fulfill a positive debt cycle. Chapter two provides empirical evidence for the role of institutions on national savings formation, showing that especially rule of law and low corruption help in increasing national savings. Chapters four and five look at detailed provisions for payment transfer balances in federal monetary unions at the example of the EMU and Fed System. Settlement in the Fed’s ISA system is analyzed and the conditions in the US’ Fed System are compared with the EMU’s framework and possibilities of TARGET2 settlement. Three main preconditions are found which determine the success of a settlement system for payment transfer balances in federal monetary unions.