Removing the hazard of Fedwire daylight overdrafts

Abstract

An analysis of the potential effects of three recent proposals for pricing Federal Reserve daylight overdrafts, demonstrating that reducing the attendant moral hazard in daylight overdraft credit depends on how, rather than on how much, pricing affects overdrafts, and that this should be a criterion for choosing among the pricing proposals.Overdrafts ; Federal Reserve banks ; Electronic funds transfers ; Payment systems