IDEAS home Printed from https://ideas.repec.org/p/zbw/bofrdp/rdp2002_023.html
   My bibliography  Save this paper

Settlement in modern network-based payment infrastructures: Description and prototype of the E-Settlement model

Author

Listed:
  • Leinonen, Harry
  • Lumiala, Veli-Matti
  • Sarlin, Riku

Abstract

Payment systems are undergoing rapid and fundamental changes stimulated largely by technological progress especially distributed network technology and real-time processing.Internet and e-commerce will have a major impact on payment systems in the future.User demands and competition will speed up developments. Payment systems will move from conventions that were originally paper-based to truly network-based solutions. This paper presents a solution - E-Settlement - for improving interbank settlement systems.It is based on a decentralised approach to be fully integrated with the banks' payment systems. The basic idea is that central bank money, the settlement cover, is transferred as an encrypted digital stamp as part of the interbank payment message.The future payment systems would in this model operate close to the Internet/e-mail concept by sending payment messages directly from the sending bank's account/payment server to the system of the receiving bank with immediate final interbank settlement without intervening centralised processing.Payment systems would become more efficient and faster and the overall structure would be come straightforward.The E-Settlement and network-based system concept could be applied with major benefits for correspondent banking, ACH and RTGS processing environments. In order to assess this novel idea the Bank of Finland built a prototype of the E-Settlement model.It consist of a group of emulated banks sending payments to each other via a TCP/IP network under the control of a central bank as the liquidity provider and an administration site monitoring the system security. This paper contains an introduction to network-based payment systems and E-Settlement, the specifications of the E-Settlement model and the description, results and experiences of the actual E-Settlement prototype.

Suggested Citation

  • Leinonen, Harry & Lumiala, Veli-Matti & Sarlin, Riku, 2002. "Settlement in modern network-based payment infrastructures: Description and prototype of the E-Settlement model," Bank of Finland Research Discussion Papers 23/2002, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp2002_023
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/211927/1/bof-rdp2002-023.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. repec:zbw:bofrdp:2002_015 is not listed on IDEAS
    2. Honkapohja, Seppo & Mitra, Kaushik, 2005. "Performance of monetary policy with internal central bank forecasting," Journal of Economic Dynamics and Control, Elsevier, vol. 29(4), pages 627-658, April.
    3. repec:zbw:bofrdp:2002_003 is not listed on IDEAS
    4. Leinonen, Harry, 2000. "Re-engineering payment systems for the E-world," Bank of Finland Research Discussion Papers 17/2000, Bank of Finland.
    5. repec:zbw:bofrdp:2000_017 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dahlberg, Tomi & Öörni, Anssi, 2006. "Finnish consumers' expectations on developments and changes in payment habits: survey in connection with the research project "Finnish payment habits 2010"," Bank of Finland Research Discussion Papers 32/2006, Bank of Finland.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:zbw:bofrdp:2007_032 is not listed on IDEAS
    2. Kobayashi, Teruyoshi & Muto, Ichiro, 2013. "A Note On Expectational Stability Under Nonzero Trend Inflation," Macroeconomic Dynamics, Cambridge University Press, vol. 17(3), pages 681-693, April.
    3. Goy, Gavin & Hommes, Cars & Mavromatis, Kostas, 2022. "Forward guidance and the role of central bank credibility under heterogeneous beliefs," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 1240-1274.
    4. Evans, George W. & McGough, Bruce, 2005. "Monetary policy, indeterminacy and learning," Journal of Economic Dynamics and Control, Elsevier, vol. 29(11), pages 1809-1840, November.
    5. James Bullard & Kaushik Mitra, 2007. "Determinacy, Learnability, and Monetary Policy Inertia," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(5), pages 1177-1212, August.
    6. George W. Evans & Seppo Honkapohja, 2003. "Adaptive learning and monetary policy design," Proceedings, Federal Reserve Bank of Cleveland, pages 1045-1084.
    7. Christian Matthes & Francesca Rondina, 2012. "Two-sided Learning in New Keynesian Models: Dynamics, (Lack of) Convergence and the Value of Information," Working Papers 661, Barcelona School of Economics.
    8. Keloharju, Matti & Malkamäki, Markku & Nyborg, Kjell G. & Rydqvist, Kristian, 2002. "A Descriptive analysis of the Finnish treasury bond market 1991-1999," Bank of Finland Research Discussion Papers 16/2002, Bank of Finland.
    9. Granlund, Peik, 2002. "Bank exit legislationin US, EU and Japanese financial centres," Research Discussion Papers 25/2002, Bank of Finland.
    10. George W. Evans & Seppo Honkapohja, 2009. "Expectations, Learning and Monetary Policy: An Overview of Recent Research," Central Banking, Analysis, and Economic Policies Book Series, in: Klaus Schmidt-Hebbel & Carl E. Walsh & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series (ed.),Monetary Policy under Uncertainty and Learning, edition 1, volume 13, chapter 2, pages 027-076, Central Bank of Chile.
    11. Athanasios Orphanides & John Williams, 2004. "Imperfect Knowledge, Inflation Expectations, and Monetary Policy," NBER Chapters, in: The Inflation-Targeting Debate, National Bureau of Economic Research, Inc.
    12. Orlando Gomes, . "Volatility, Heterogeneous Agents and Chaos," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV.
    13. Kuang, Pei, 2016. "A Note On Learning In A Credit Economy," Macroeconomic Dynamics, Cambridge University Press, vol. 20(3), pages 845-855, April.
    14. Dmitri Kolyuzhnov & Anna Bogomolova, 2007. "Optimal Monetary Policy Rules: The Problem of Stability under Heterogeneous Learning," 2007 Meeting Papers 713, Society for Economic Dynamics.
    15. Lim, G.C. & McNelis, Paul D., 2007. "Inflation targeting, learning and Q volatility in small open economies," Journal of Economic Dynamics and Control, Elsevier, vol. 31(11), pages 3699-3722, November.
    16. Honkapohja, Seppo & Mitra, Kaushik & Evans, George W., 2011. "Notes on Agents’ Behavioral Rules Under Adaptive Learning and Studies of Monetary Policy," SIRE Discussion Papers 2011-04, Scottish Institute for Research in Economics (SIRE).
    17. Anssi Rantala, 2004. "Adaptive learning and multiple equilibria in a natural rate monetary model with unemployment persistence," GE, Growth, Math methods 0404005, University Library of Munich, Germany.
    18. repec:spo:wpecon:info:hdl:2441/f4rshpf3v1umfa09lat09b1bg is not listed on IDEAS
    19. repec:hal:spmain:info:hdl:2441/7qiov5j7308rbprdcjkq8udd2u is not listed on IDEAS
    20. repec:spo:wpmain:info:hdl:2441/7qiov5j7308rbprdcjkq8udd2u is not listed on IDEAS
    21. Branch, William A. & McGough, Bruce, 2009. "A New Keynesian model with heterogeneous expectations," Journal of Economic Dynamics and Control, Elsevier, vol. 33(5), pages 1036-1051, May.
    22. Colucci, Domenico & Valori, Vincenzo, 2011. "Adaptive expectations and cobweb phenomena: Does heterogeneity matter?," Journal of Economic Dynamics and Control, Elsevier, vol. 35(8), pages 1307-1321, August.
    23. Muto, Ichiro, 2011. "Monetary policy and learning from the central bank's forecast," Journal of Economic Dynamics and Control, Elsevier, vol. 35(1), pages 52-66, January.
    24. Schaling, Eric & Tesfaselassie, Mewael F., 2013. "Trend growth and learning about monetary policy rules in a two-block world economy," Kiel Working Papers 1818, Kiel Institute for the World Economy (IfW Kiel).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:bofrdp:rdp2002_023. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/bofgvfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.