Economizing on liquidity with deferred settlement mechanisms. From: Federal Reserve Bank of New York Economic PolicyReview | Date: December 1, 2004| Author: Johnson, Kurt; McAndrews, James J.; Soramaki, Kimmo | COPYRIGHT 2004 Federal Reserve Bank of New York. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group.Copyright information

* Real-time gross settlement (RTGS) systems such as the Federal Reserve's Fedwire Funds Service enable participating banks to settle payments immediately and in the full amount; however, the high level of liquidity inherent in the systems requires large intraday credit extensions.

* An examination of several deferred settlement mechanisms that could potentially complement RTGS systems considers a novel mechanism--a receipt-reactive gross settlement system--that bases the...