Livia Polo Friz
- 30 July 2020
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 5, 2020Details
- This article analyses how liquidity is distributed across jurisdictions in TARGET2 – the payment system owned and operated by the Eurosystem – and the implications for payment settlement. It discusses TARGET2 participants’ reliance on intraday credit and the time of payment settlement, which are important aspects for the payment system operator. The article documents considerable heterogeneity across countries in liquidity holdings, concentration of liquidity among participants, usage of the intraday credit facility and time of settlement. A panel study across countries shows that larger holdings of liquidity are associated with a lower use of the credit line and an earlier time of settlement.
- JEL Code
- G20 : Financial Economics→Financial Institutions and Services→General
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages