Payment of interest on banks' reserves has long been an important subject of discussion in monetary policy forums. Recent legislation that allows the U.S. Federal Reserve to pay interest on reserves starting in 2011 has made these issues especially timely. By studying a simple model of the...

The monetary and payment system consequences of the September 11, 2001, terrorist attacks are reviewed and compared to selected U.S. banking crises. Interbank payment disruptions appear to be the central feature of all the crises reviewed. For some the initial trigger is a credit shock, while...