Technology Diffusion within Central Banking: The Case of Real-Time Gross Settlement
Morten L. Bech
Federal Reserve Bank of New York
Federal Reserve Bank of New York - Domestic Research Function; Leonard N. Stern School of Business - Department of Economics
FRB of New York Staff Report No. 260
We examine the diffusion of real-time gross settlement (RTGS) technology across all 174 central banks. RTGS reduces settlement risk and facilitates financial innovation in the settlement of foreign exchange trades. In 1985, only three central banks had implemented RTGS systems, and by year-end 2005, that number had increased to ninety. We find that the RTGS diffusion process is consistent with the standard S-curve prediction. Real GDP per capita, the relative price of capital, and trade patterns explain a significant part of the cross-country variation in RTGS adoption. These determinants are remarkably similar to those that seem to drive the cross-country adoption patterns of other technologies.
Number of Pages in PDF File: 35
Keywords: central bank, technology, diffusion, S-curve, payment systems, RTGS
JEL Classification: C72, E58, O19working papers series
Date posted: September 27, 2006
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