Quantifying the benefits of a liquidity-saving mechanism
- Publication date
- Publisher
Abstract
This paper attempts to quantify the benefits associated with operating a liquidity-saving mechanism (LSM) in Fedwire, the large-value payment system of the Federal Reserve. Calibrating the model of Martin and McAndrews (2008), we find that potential gains are large compared to the likely cost of implementing an LSM, on the order of hundreds of thousands of dollars per day.Fedwire ; Liquidity (Economics) ; Payment systems ; Federal Reserve System