Payments Systems , Settlement , and Risk ( Preliminary ) ¤
نویسنده
چکیده
We study two dynamic models of payments systems. The ...rst is a deterministic model with spatial separation where we consider alternative payments systems institutions and their implications for allocation and welfare. A payments system with period-by-period settlement in outside money improves on decentralized exchange using currency by reducing average cash balances and the average holding period of money. However, an e¢cient allocation is supported by a payments system with interbank credit where settlement is not imposed. In the second model, there is random matching and unobserved productivity shocks and preference shocks. We explore how risk should be shared ¤This work is preliminary in nature, and most certainly contains errors.
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