Footnote on Bank Clearing Systems

Only after my recent comment on"Paradoxes of Paying Interest on Reserves," did I become aware of an important, related article by George Selgin. Entitled"Wholesale Payments: Questioning the Market-Failure Hypothesis" and appearing in the International Review of Law and Economics, 24 (2004): 333-350, it tellingly critiques the worldwide effort of central banks, culminating in the 1990s, to replace deferred net settlement clearing systems with real-time gross settlement (RTGS) systems. Pressure was applied even to private clearing systems, such as CHIPS, using spurious market-failure arguments.