This study assesses the payment system of the Pantawid Pamilyang Pilipino Program (4Ps or Pantawid Pamilya) in terms of the amount, frequency, and mode of payment delivery of the cash transfers. The study is an early attempt of the Institute to examine the Pantawid Pamilya implementation and...

Recently, Fuest and Sinn (2018) have demanded a change of rules for the Eurozone's Target 2 payment system, claiming it would violate the Statutes of the European System of Central Banks and of the European Central Bank. The authors present a stylized model based on a set of macro-economic...

The COVID-19 pandemic and the resulting public health mitigation have caused large-scale economic disruptions globally. During this time, there is an increased need to predict the macroeconomy's short-term dynamics to ensure the effective implementation of fiscal and monetary policy. However,...

Digital currencies store balances in anonymous electronic addresses. We analyze the tradeoffs between the safety and convenience of aggregating balances in addresses, electronic wallets and banks. In our model, agents balance the risk of theft of a large account with the cost to safeguarding a...

This paper uses reinforcement learning (RL) to approximate the policy rules of banks participating in a high-value payments system. The objective of the agents is to learn a policy function for the choice of amount of liquidity provided to the system at the beginning of the day. Individual...

Digital platforms, such as Alibaba and Amazon, operate an online marketplace to facilitate transactions. This paper studies a platform's business model choice between accepting cash and issuing tokens, as well as the implications for welfare, resiliency, and interoperability. A cash platform...

We model how a cyber attack may be amplified through the U.S. financial system, focusing on the wholesale payments network. We estimate that the impairment of any of the five most active U.S. banks will result in significant spillovers to other banks, with 38 percent of the network affected on...

The increasingly complex economic and financial environment in which we live makes the management of liquidity in payment systems and the economy in general a persistent challenge. New technologies make it possible to address this challenge through alternative solutions that complement and...

We study bankruptcy problems in financial networks in the presence of general bankruptcy laws. The set of clearing payment matrices is shown to be a lattice, which guarantees the existence of a greatest and a least clearing payment. Multiplicity of clearing payment matrices is both a theoretical...

Payment systems are fundamental pillars of countries’ economic stability and financial systems. Central banks use them to promote safe and efficient electronic payments. As such, central banks have developed various tools to control and monitor inherent risks such as systemic risk, liquidity...

The success of alternative payment systems has led to discussion of various proposals to replace money with a new technology-based system, though many lack a clear idea of what exactly is the "money" they seek to replace. We begin by presenting the explanation of money's role in the economy...

We investigate how the COVID-19 pandemic has changed consumers' payments habits in Canada. We rely on high-frequency data on cash withdrawals and debit card transactions from Interac Corp. and Canada's Automated Clearing Settlement System. We construct daily measures of payment habits reflecting...

In a market where consumers choose between payment options and firms compete with products and prices, we show that payment data drives the formation of a market monopoly. A data-sharing policy can successfully restore and maintain a competitive market, but often at the expense of both...

We outline a three-step framework to investigate stablecoin arrangements and quantitatively assess their risk. The first step is to classify the stablecoin arrangement into three parts-coin structure, transfer system(s) and financial service(s) - and categorize the attributes of each part. The...

Providing bank notes is one of the Bank of Canada’s core functions. The Bank is therefore interested in whether cash is adequately distributed across society, and this also influences the Bank’s thinking on issuing a central bank digital currency. We provide a perspective on these issues by...

Consumer payments in the United States gradually have been shifting away from paper checks for the past several years. Cash use has declined as well, although at a much slower pace. As the number of check payments has decreased, those payments have been replaced with electronic and card...

Central bank digital currencies (CBDCs) could ease current frictions in cross-border payments - and particularly so if central banks factor an international dimension into CBDC design from the outset. Based on a survey of 50 central banks in the first quarter of 2021, this paper explores initial...

Improvements in technology, coupled with growing demand for digital payment methods, are increasingly reshaping the way payments are made. Non-bank institutions now offer a wide range of retail payment services. This raises the question of where the regulatory perimeter should be drawn....

New financial technologies - including those underpinning cryptocurrencies - herald broader access to the financial system, quicker and more easily verifiable settlement of transactions and payments, and lower transaction costs. Domestic and cross-border payment systems are on the threshold of...

Digitalisierung und damit verbundene Innovationen treiben den Strukturwandel in der Finanzwirtschaft an.Sie können den Zahlungsverkehr vielleicht sicherer, schneller und bequemer machen. Andererseits können sie zu Verwerfungen und Instabilitäten im Finanzsystem führen und Verbrauchern...

The recent increase in the use of a digital payment system is an interesting prospect in predicting macroeconomic activity. A digital payment system comprising credit cards, debit cards, automated teller machines (ATMs), and mobile banking represents a broad spectrum of spending activity. The...

The amount of central bank money, or liquidity, needed to settle payments, depends on the way the settlement is organized. It is largest when payments are settled individually on gross basis and smallest with settlement in one big netting cycle. Retail payments are increasingly processed in...

Using a representative sample of the U.S. adult population, we analyze which payment methods consumers use to pay other consumers (p2p) and how these choices depend on transaction and demographic characteristics. We additionally construct a random matching model of consumers with diverse...

We show that payment system data can help predict economic activity in Denmark by employing mixed‑data sampling (MIDAS) regression methods to forecast quarterly macroeconomic variables using high‑frequency data. Among a set of frequently used predictors of economic activity, payment system...

Declining ATM numbers pose a challenge for competition policy and financial regulatory authorities. In this report we review the Finnish experience of regulating the competition in the ATM industry. To analyze the Finnish developments we extend the model of Kopsakangas-Savolainen and Takalo...

Even before their deployment in major economies, one of the concerns that has been voiced about central bank digital currency (CBDC) is that it might be too successful and lead to bank disintermediation, which could intensify further in the case of a banking crisis. Some also argue that CBDC...

Interconnectedness is an inherent feature of the modern financial system. While it contributes to efficiency of financial services, it also creates structural vulnerabilities: pernicious shock transmission and amplification impacting banks' capitalization. This has recently been seen during the...

We use a simple model to study whether private payment systems based on bank deposits can provide the optimal level of safety. In the model, bank deposits backed by projects are subject to default risk that can be mitigated by a depositor's ex ante and ex post monitoring. Safe payment...