Accessible navigation:
Title | Estimating Settlement Risk and the Potential for Contagion in Canada's Automated Clearing Settlement System |
Author(s) | Carol Ann Northcott |
Type | Working Paper 2002-41 |
Date of publication |
December 2002 |
Language | English |
Abstract |
Payments systems operate virtually unnoticed in our daily lives and yet are crucial to a wellfunctioning economy and financial system. Because they explicitly link financial institutions, payments systems provide a way to transmit risk within, and between, financial systems. Ideally, payments systems should be designed and operated so as not to add risk in the event of a crisis. The author examines the potential for contagion through linkages arising from the interaction of financial institutions in a Canadian payments system, the Automated Clearing Settlement System (ACSS). A method of measuring risk in the system, given its unique design, is developed and used to estimate contagion over a wide range of conditions. The author finds, first and foremost, that the ACSS has only a limited capacity, if any, to facilitate contagion in the current environment. |
Bank topic index |
Financial institutions; Payments, clearing and settlements systems |
JEL classification |
E44, G21 |
You may download the paper in the following format(s):