Comment on Payment System Risk

  • Mark J. Flannery
Part of the Innovations in Financial Markets and Institutions book series (IFMI)


Each of the papers by Clair, Milano, and Redish offers a different perspective on payment systems, and each concentrates on a different aspect of the issue. After reading all three, I decided I could contribute the most by addressing a question that cuts across all the papers: Why is banking’s future closely related to what appears to be the arcane, operational issue of payment system risk? Put another way, why is more than 30 percent of this book devoted to papers about the payment system, when the broader issue under discussion is whether the market or regulators should govern banking’s future? My comments address two major questions:
  1. 1.

    Why do we care about payment system risk?

  2. 2.

    What actions are appropriate for controlling that risk?



Credit Risk Federal Reserve Payment System Individual Bank Private Payment 


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  1. Kane, Edward J. 1982. “Changes in the Provision of Correspondent Banking Services and the Role of Federal Reserve Banks under the DIDMC Act.” Carnegie-Rochester Conference Series on Public Policy 16, pp. 93–126.CrossRefGoogle Scholar

Copyright information

© Kluwer Academic Publishers 1991

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  • Mark J. Flannery

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