Intraday Liquidity and the Settlement of Large-Value Payments: A Simulation-Based Analysis

Abstract

Interbank systems are of great importance to the economy and the financial system. Using simulations based on real data from Norges Bank’s settlement system, this article illustrates trade-offs between delayed payments and liquidity usage in interbank settlement systems. The simulations demonstrate, for example, that the speed with which payments are settled may be affected by changes in the liquidity available to settlement participants. The effect of optimisation routines in the settlement system is also simulated

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