Monetary policy implementation and payment system modernization

by Jonathan Witmer

24/7 payment settlement may impact the demand for central bank reserves and thus could have an effect on monetary policy implementation. Using the standard workhorse model of monetary policy implementation (Poole, 1968), we show that 24/7 payment settlement induces a precautionary demand for central bank balances. Absent any changes or response by the central bank, this will put upward pressure on the overnight interest rate in a standard corridor system of monetary policy implementation. A floor system is much less sensitive to this change, as long as excess balances are large enough.

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Year of publication:	[2020] ; Last updated: June 30, 2020
Authors:	Witmer, Jonathan
Publisher:	[Ottawa] : Bank of Canada
Subject:	Monetary policy implementation \| Payment clearing and settlement systems \| Geldpolitik \| Monetary policy \| Zahlungsverkehr \| Payment transactions \| Clearing \| Financial clearing \| Internationaler Zahlungsverkehr \| International payments \| Zentralbank \| Central bank \| Geldmarkt \| Money market

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Extent:	1 Online-Ressource (circa 24 Seiten) Illustrationen
Series:	Staff working paper / Bank of Canada. - Ottawa : [Verlag nicht ermittelbar], ISSN 1701-9397, ZDB-ID 2278568-1. - Vol. 2020, 26
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	hdl:10419/241192 [Handle]
Classification:	E - Macroeconomics and Monetary Economics ; E4 - Money and Interest Rates ; E40 - Money and Interest Rates. General ; E42 - Monetary Systems; Standards; Regimes; Government and the Monetary System ; E43 - Determination of Interest Rates; Term Structure Interest Rates
Source:	ECONIS - Online Catalogue of the ZBW

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