Technology Diffusion within Central Banking: The Case of Real-Time Gross Settlement

35 Pages Posted: 27 Sep 2006

See all articles by Morten L. Bech

Morten L. Bech

Bank for International Settlements (BIS) - Committee on Payments and Market Infrastructures

Bart Hobijn

ASU

Date Written: September 2006

Abstract

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.

Keywords: central bank, technology, diffusion, S-curve, payment systems, RTGS

JEL Classification: C72, E58, O19

Suggested Citation

Bech, Morten L. and Hobijn, Bart, Technology Diffusion within Central Banking: The Case of Real-Time Gross Settlement (September 2006). FRB of New York Staff Report No. 260, Available at SSRN: https://ssrn.com/abstract=932596 or http://dx.doi.org/10.2139/ssrn.932596

Morten L. Bech (Contact Author)

Bank for International Settlements (BIS) - Committee on Payments and Market Infrastructures ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland
41612808923 (Phone)

Bart Hobijn

ASU ( email )

501 E. Orange Street
Tempe, AZ 85287-9801
United States
(480)-965-0215 (Phone)

HOME PAGE: http://www.barthobijn.net

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