Payment clearing and settlement systems

• Safe Payments

  Staff Working Paper 2020-53 Jonathan Chiu, Mohammad Davoodalhosseini, Janet Hua Jiang, Yu Zhu

  In a cashless economy, would the private sector invest in the optimal level of safety in a deposit-based payment system? In general, because of externalities, the answer is no. While the private sector could over- or under-invest in safety, the government can use taxes or subsidies to correct private incentives.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Digital currencies and fintech, Financial institutions, Payment clearing and settlement systems JEL Code(s): E, E4, E42, E5, E50, G, G2, G21
• November 12, 2020

  Helping the economy after the COVID‑19 pandemic

  Speech summary Carolyn A. Wilkins Munk School of Global Affairs and Public Policy Toronto, Ontario

  The pandemic won’t last forever. Senior Deputy Governor Carolyn A. Wilkins talks about what the economy will need once we’re past the COVID-19 crisis.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Business fluctuations and cycles, Central bank research, Climate change, Coronavirus disease (COVID-19), Debt management, Digital currencies and fintech, Expectations, Financial institutions, Financial stability, Financial system regulation and policies, Firm dynamics, Fiscal policy, Inflation targets, Interest rates, Labour markets, Monetary policy communications, Monetary policy framework, Payment clearing and settlement systems, Potential output, Productivity, Recent economic and financial developments
• November 12, 2020

  Exploring life after COVID-19: the far side of the moon

  Remarks (delivered virtually) Carolyn A. Wilkins Munk School of Global Affairs and Public Policy Toronto, Ontario

  Senior Deputy Governor Carolyn A. Wilkins discusses what the economy will need once we’re past the COVID-19 crisis.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Business fluctuations and cycles, Central bank research, Climate change, Coronavirus disease (COVID-19), Debt management, Digital currencies and fintech, Expectations, Financial institutions, Financial stability, Financial system regulation and policies, Firm dynamics, Fiscal policy, Inflation targets, Interest rates, Labour markets, Monetary policy communications, Monetary policy framework, Payment clearing and settlement systems, Potential output, Productivity, Recent economic and financial developments

• Security and convenience of a central bank digital currency

  Staff Analytical Note 2020-21 Charles M. Kahn, Francisco Rivadeneyra

  An anonymous token-based central bank digital currency (CBDC) would pose certain security risks to users. These risks arise from how balances are aggregated, from their transactional use and from the competition between suppliers of aggregation solutions.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Central bank research, Digital currencies and fintech, Financial system regulation and policies, Payment clearing and settlement systems JEL Code(s): E, E4, E42, G, G2, G21

• Interbank Asset-Liability Networks with Fire Sale Management

  Staff Working Paper 2020-41 Zachary Feinstein, Grzegorz Halaj

  Raising liquidity when funding is stressed creates pressure on the financial market. Liquidating large quantities of assets depresses their prices and may amplify funding shocks. How do banks weathering a funding crisis contribute to contagion risk?

  Content Type(s): Staff research, Staff working papers Topic(s): Financial stability, Financial system regulation and policies, Payment clearing and settlement systems JEL Code(s): C, C6, C62, C63, C7, C72, G, G0, G01, G1, G11

• Predicting Payment Migration in Canada

  Staff Working Paper 2020-37 Anneke Kosse, Zhentong Lu, Gabriel Xerri

  Developments are underway to replace Canada’s two core payment systems with three new systems. We use a discrete choice model to predict migration patterns of end-users and financial institutions for future systems and discuss their policy implications.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Financial services, Financial stability, Financial system regulation and policies, Payment clearing and settlement systems JEL Code(s): C, C3, E, E4, E42, G, G1, G2, G28

• What do high-frequency expenditure network data reveal about spending and inflation during COVID‑19?

  Staff Analytical Note 2020-20 Kim Huynh, Helen Lao, Patrick Sabourin, Angelika Welte

  The official consumer price index (CPI) inflation measure, based on a fixed basket set before the COVID 19 pandemic, may not fully reflect what consumers are currently experiencing. We partnered with Statistics Canada to construct a more representative index for the pandemic with weights based on real-time transaction and survey data.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, Payment clearing and settlement systems JEL Code(s): D, D1, D12, E, E3, E31, E4, E42, E5, E52

• Liquidity Usage and Payment Delay Estimates of the New Canadian High Value Payments System

  Staff Discussion Paper 2020-9 Francisco Rivadeneyra, Nellie Zhang

  As part of modernizing its core payments infrastructure, Canada will replace the Large Value Transfer System (LVTS) with a new Real-Time Gross Settlement (RTGS) system called Lynx. An important question for policy-makers is how Lynx should be designed.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Financial services, Financial system regulation and policies, Payment clearing and settlement systems JEL Code(s): C, C5, E, E4, E42, E5, E58

• Survival Analysis of Bank Note Circulation: Fitness, Network Structure and Machine Learning

  Staff Working Paper 2020-33 Diego Rojas, Juan Estrada, Kim Huynh, David T. Jacho-Chávez

  Using the Bank of Canada's Currency Information Management Strategy, we analyze the network structure traced by a bank note’s travel in circulation and find that the denomination of the bank note is important in our potential understanding of the demand and use of cash.

  Content Type(s): Staff research, Staff working papers Topic(s): Bank notes, Econometric and statistical methods, Payment clearing and settlement systems JEL Code(s): C, C5, C52, C6, C65, C8, C81, E, E4, E42, E5, E51

• Why Fixed Costs Matter for Proof-of-Work Based Cryptocurrencies

  Staff Working Paper 2020-27 Rodney J. Garratt, Maarten van Oordt

  Can Bitcoin survive? Some say it will become vulnerable to attacks as the rewards for processing Bitcoin transactions continue to decline. The economics of fixed costs suggest the specialized hardware used to mine Bitcoin may be key to its survival.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Payment clearing and settlement systems JEL Code(s): G, G1, G10, L, L1, L11