ECON206 Lecture Notes - Lecture 16: Landing Vehicle Tracked, Systemic Risk, Debit Card
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ECON206 Full Course Notes
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Systemic risk and the lvts: 16 direct lvts participants, can only make a payment if, positive settlement balances, posted collateral, explicit lines of credit, system will settle even in the face of risk and liquidity problems. Systemic risk: risk to the entire payments system due to the inability of one financial institution to fulfill its payment obligations in a timely fashion. Non-lvts (acss) transactions: paper-based payments, cheques, debit card transactions, cleared through the automated clearing settlement system (acss, aggregates interbank payments, calculates net amounts to be transferred, completed the next day. Bank of canada policy rate: overnight interest rate, participants borrow and lend overnight funds to each other in the money market, shortest term rate available. Influences other interest rates: operating band, within a band of 50 basis points, 0. 5, charges participants that require an overdraft loan to cover negative balances, upper limit, rate the bank pays for positive settlement, reference rate.
