Private payment systems, collateral, and interest rates

Private Payment Systems, Collateral, and Interest Rates

Recent developments in private payments arrangements, particularly at the wholesale level, (including recent innovations in China) challenge central banks’ longstanding monopoly on the provision of the ultimate means of settlement for financial transactions. This paper examines competition between public payments arrangements and private intermediaries, and the effect on central banks’ role in ...

Offshore Settlement, Collateral, and Interest Rates

Recent developments in private payments arrangements, particularly at the wholesale level, challenge central banks’ longstanding monopoly on the provision of the ultimate means of settlement for financial transactions. This paper examines competition between public payments arrangements and private intermediaries, and the effect on central banks’ role in monetary policy. Central to the issue is...

Private cards and the bypass of payment systems by merchants

This paper studies the incentives of a merchant to bypass a payment platform by issuing private cards. In our model, a payment platform allocates the total cost of a card transaction between a monopolistic issuer and a monopolistic acquirer by choosing an ‘‘interchange fee”. We determine how the level of the interchange fee impacts a merchant’s decision to issue private cards, if there are stra...

The effect of interest rates on investment function: A comparison of major countries with Islamic and conventional banking systems

Islamic banking has attracted much attention in the financial economics literature due to its rapid growth. Islamic banking has emerged as an alternative to the conventional form of banking and has grown rapidly in Muslim and non-Muslim countries over the past three decades. Islamic banks have expanded their bases in more than 60 countries around the world, and Islamic banks are expected to rec...

Private Property and Public Interest