Search for other papers by International Monetary Fund in
Current site
Google Scholar
Abstract
Standing at the apex of the tiered account relationships through which interbank payments are typically settled, central banks have long played a critical role as payments intermediaries.1 In particular, central banks have historically performed the function of “providing banks with deposits and a means of transferring them to make interbank payments,”2 a function Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, has called “the fundamental core of central banking.”3 Of course, payment systems, as the discussion in this chapter will indicate, have specific legal, technical, operational, and other institutional characteristics, which may differ from time to time (reflecting technological and other developments), from country to country (principally reflecting legal, regulatory, and policy considerations), and from system to system (reflecting the needs of payment system users and others).4 As a result, the precise function that central banks perform in a particular payment system may vary considerably depending upon the institutional characteristics of the payment system.
International Monetary Fund Copyright © 2010-2021. All Rights Reserved.