Payment System Risk: A Private-Sector View
It is useful to begin a discussion of payment system risk with a brief overview of the payment system itself so that we can share a common understanding of the mechanism, its size, and its complexity before we begin to discuss the questions of risk. I shall present some basic statistics on the overall size of the payment system, discuss some of the mechanics, and then examine the question of the so-called daylight overdraft and describe how the Federal Reserve views that phenomenon. Finally, I will try to describe some of the proposed remedies for daylight overdrafts and some other remedies that are not so freely discussed.
KeywordsCredit Risk Federal Reserve Payment System Insurance Fund Reserve Bank
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