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Payment systems, inside money and financial intermediation / Merrouche, Ouarda
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Merrouche, Ouarda
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Access to Finance.
- Bank failures.
- Bank of England.
- Banking system.
- Banking systems.
- Bankruptcy and Resolution of Financial Distress.
- Banks.
- Banks & Banking Reform.
- Borrowing costs.
- Central banks.
- Currencies and Exchange Rates.
- Debt Markets.
- Demand deposits.
- Deposits.
- Federal deposit insurance.
- Federal reserve system.
- Finance and Financial Sector Development.
- Interbank markets.
- Interest rates.
- Liquid assets.
- Loan commitments.
- Open market operations.
- Payment systems.
- Settlement systems.
- Transition economies.
- Transport.
- Local Subjects:
- Access to Finance.
- Bank failures.
- Bank of England.
- Banking system.
- Banking systems.
- Bankruptcy and Resolution of Financial Distress.
- Banks.
- Banks & Banking Reform.
- Borrowing costs.
- Central banks.
- Currencies and Exchange Rates.
- Debt Markets.
- Demand deposits.
- Deposits.
- Federal deposit insurance.
- Federal reserve system.
- Finance and Financial Sector Development.
- Interbank markets.
- Interest rates.
- Liquid assets.
- Loan commitments.
- Open market operations.
- Payment systems.
- Settlement systems.
- Transition economies.
- Transport.
- Physical Description:
- 1 online resource (33 pages)
- Place of Publication:
- Washington, D.C., The World Bank, 2010
- System Details:
- data file
- Summary:
- This paper assesses the impact of introducing an efficient payment system on the amount of credit provided by the banking system. Two channels are investigated. First, innovations in wholesale payments technology enhance the security and speed of deposits as a payment medium for customers and therefore affect the split between holdings of cash and the holdings of deposits that can be intermediated by the banking system. Second, innovations in wholesale payments technology help establish well-functioning interbank markets for end-of-day funds, which reduces the need for banks to hold excess reserves. The authors examine these links empirically using payment system reforms in Eastern European countries as a laboratory. The analysis finds evidence that reforms led to a shift away from cash in favor of demand deposits and that this in turn enabled a prolonged credit expansion in the sample countries. By contrast, while payment system innovations also led to a reduction in excess reserves in some countries, this effect was not causal for the credit boom observed in these countries.
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