Christopher Hackworth, Nicola Shadbolt and David Seaward.
While official housing market statistics are relatively timely and high frequency, they usually come with a lag of at least one month. So indicators that lead official estimates are helpful for identifying turning points, or any ‘shocks’ to the economy.
Continue reading “Bitesize: Understanding housing activity in real time”
Marius Jurgilas, Ben Norman and Tomohiro Ota.
The final, practical determinant of whether a bank is a going concern is: does it have the liquidity to make its payments as they become due? Thus, the ultimate crucible in which financial crises play out is the payment system. At the height of recent crises, some banks delayed making payments for fear of paying to a bank that would fail (Norman (2015)). This post sets out a design feature in a payment system that creates incentives, especially during financial crises, for banks to keep making payments. This feature could address situations where banks in the system would otherwise be tempted to postpone their payments to a bank that is (rumoured to be) in trouble.
Continue reading “How credit risk can incentivise banks to keep making payments at the height of a crisis”
CHAPS banks have oodles of liquidity and are not afraid to use it, as quantitative easing has meant banks accumulated unprecedented quantities of reserves. And in this liquidity-abundant world, banks are less likely to be concerned with how well they use tools for liquidity saving in the Bank’s Real-Time Gross Settlement (RTGS) infrastructure. And besides, the timings of liquidity-hungry payments are stubborn. They can’t always be retimed to optimise liquidity usage, and this means that the potential for liquidity savings in RTGS from the Bank’s Liquidity Savings Mechanism (LSM) is limited.
Continue reading “Saving Liquidity in a Liquidity-abundant World: Why don’t banks use less liquidity when making high-value payments?”