Central Banking

ECB paper on large-value payment systems

The ECB Working Paper "Incorporating a 'public good factor' into the pricing of large-value payment systems" considers optimal pricing rules for a public large-value payment system (LVPS) that produces a public good (like prevention of systemic risk) but faces competition by a private LVPS for the private provision of large value payments.

The authors show that the marginal cost of the public LVPS has to be corrected by a "public good factor" that can be interpreted alternatively as the decrease

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