ECON206 Chapter Notes - Chapter 16: Payments Canada, Landing Vehicle Tracked, Overnight Rate

• School: University of Waterloo
• Department: Economics
• Course: ECON206
• Professor: Derek Stacey

Document Summary

Overnight rate: the interest rate on overnight (one -day) securities from one bank to another. The bank of canada"s primary instrument of monetary policy. Large value transfer system (lvts): an electronic, net settlement system for the transfer of large-value payments. Lvts participants: members of the canadian payments association (cpa) who participate in the lvts and maintain a settlement account at the bank of canada. Systemic risk: the risk to the entire payments system due to the inability of one financial institution to fulfill its payment obligations in a timely fashion. Direct clearers: member of the canadian payments association who participate directly in the automated clearing set tlement system (acss) and maintain a settlement account at the bank of canada. Multilateral netting: the lvts process by which only the net credit or debit position of each participant vis- -vis all other participants is calculated for settlement, thereby reducing the need for a large amount of settlement balances.