James Chapman - Latest

• November 17, 2011

  Liquidity Provision and Collateral Haircuts in Payments Systems

  Bank of Canada Review - Autumn 2011 James Chapman, Jonathan Chiu, Miguel Molico

  Central banks play a pivotal role in well-functioning payments systems by providing liquidity via collateralized lending. This article discusses the role of collateral and haircut policy in central bank lending, as well as the distinguishing features of the central bank’s policy relative to private sector practices. It presents a model that explicitly incorporates the unique role of central banks in the payments system and argues that central banks must consider how their haircut policies affect the relative price and liquidity of assets, the market’s asset allocation, and the likelihood of participants to default. Furthermore, under extraordinary circumstances, there is a rationale for the central bank to temporarily reduce haircuts or broaden the list of eligible collateral to mitigate the shortage of liquidity in the market.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Financial stability, Payment clearing and settlement systems
• June 22, 2011

  Emerging from the Shadows: Market-Based Financing in Canada

  Financial System Review - June 2011 James Chapman, Lawrence L. Schembri, Stéphane Lavoie

  Content Type(s): Publications, Financial System Review articles
• February 17, 2011

  Payment Networks: A Review of Recent Research

  Bank of Canada Review - Winter 2010-2011 James Chapman, Lana Embree, Tom Roberts, Nellie Zhang

  In this article, the authors review work done at the Bank of Canada and at other central banks with the relatively new application of network analysis to the study of payments systems.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Payment clearing and settlement systems