On October 10, the Wharton Initiative on Financial Policy and Regulation (WIFPR) will host a webinar on structural conflicts in central banking. WIFPR Director Itay Goldstein will moderate a virtual discussion with Aaron Klein (Brookings) on his new WIFPR white paper, “Structural Conflicts in Central Banking: Regulator or Operator of a Payment System?"
You can view the white paper here.
Please register for the webinar here.
Abstract: Central banks can operate national payment systems, either as monopolies or in competition with private systems. Central banks can be the payment system regulator. This paper analyzes the multiple and sometimes conflicting roles facing central banks and payment systems. The paper explores different objectives central banks are tasked with (or task themselves with), looking at whether these objectives are in agreement or in conflict with each other and with other mandates the central bank faces. A primary focus of the paper is to examine the impact of different roles of the central bank in the payment system with corresponding innovation, or lack thereof, in that nation's payment system. The paper examines why America's payment system became a global laggard in adopting better payment technology. Structural conflicts between the Federal Reserve's role as regulator of America's payment systems and operator of its own system, regulator of bank’s safety and soundness, and prioritization of objectives played various roles in America’s failure to modernize its payment system.