Unconventional monetary policy measures included fixed-rate full allotment since October 2008; swap agreements with other central banks (e.g., Federal Reserve, Swiss National Bank); extension of the collateral framework; extension of the duration of the refinancing operations (e.g., year tenders starting July 2009 and three-year tenders starting December 2011); the introduction of the Covered Bond Purchase Program (May 2009), the Securities Market Program (May 2010), and the Outright Monetary Transactions (September 2012).

No abstract

We present the application of network theory to the Dutch payment system with specific attention to systemic stability. The network nodes comprise of domestic banks, large international banks and TARGET countries, the links are established by payments between the nodes. Traditional measures (transactions, values) first show payments are relatively well behaved through time and that the system does not contain a group of significant structural net receivers or payers among the participant institutions. Structural circular flows do, however, exist in the system, most prominently a large circular net flow between TARGET countries. Analysis of the properties of prominent network measures over time shows that fast network development takes place in the early phase of network formation of about one hour and slower development afterwards. The payment network is small (in actual nodes and links), compact (in path length and eccentricity) and sparse (in connectivity) for all time periods. In the long run, a mere 12% of the possible number of interbank connections is ever used and banks are on average only 2 steps apart. Relations in the network tend to be reciprocal. Our results also indicate that the network is susceptible to directed attacks. In a final section we show that the recent 'sub prime' turmoil in credit markets has not materially affected the network structure. JEL codes: G1, E5

Unconventional monetary policy measures included fixed-rate full allotment since October 2008; swap agreements with other central banks (e.g., Federal Reserve, Swiss National Bank); extension of the collateral framework; extension of the duration of the refinancing operations (e.g., year tenders starting July 2009 and three-year tenders starting December 2011); the introduction of the Covered Bond Purchase Program (May 2009), the Securities Market Program (May 2010), and the Outright Monetary Transactions (September 2012).

This experimental study investigates the behaviour of banks in a large value payment system. More specifically, we look at 1) the reactions of banks to disruptions in the payment system, 2) the way in which the history of disruptions affects the behaviour of banks (path dependency) and 3) the effect of more concentration in the payment system (heterogeneous market versus a homogeneous market). The game used in this experiment is a stylized version of a model of Bech and Garrett (2006) in which each bank can choose between paying in the morning (efficient) or in the afternoon (inefficient). The results show that there is significant path dependency in terms of disruption history. Also the chance of disruption influences the behaviour of the participants. Once the system is moving towards the inefficient equilibrium, it does not easily move back to the efficient one. Furthermore, there is a clear leadership effect in the heterogeneous market.JEL codes: C92, D70, D78, E58