An Efficient Liquidity Savings Mechanism

Darrell Duffie, Srisht F. Singh & Chaojun Wang
Working Paper 35679
DOI 10.3386/w35679
Issue Date

Liquidity savings mechanisms (LSMs) reduce the quantity of reserve balances that banks need to process payments. An LSM can mitigate coordination failures in which banks delay their payments to each other because they expect that other banks will do the same. We provide the design and properties of a maximally efficient new form of LSM.

  • Darrell Duffie, Srisht F. Singh, and Chaojun Wang, "An Efficient Liquidity Savings Mechanism," NBER Working Paper 35679 (2026), https://doi.org/10.3386/w35679.

Related

Topics

Microeconomics
Market Structure and Distribution
Welfare and Collective Choice

Programs

Monetary Economics

Working Groups

Market Design

More from the NBER

In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals—the NBER Reporter, the NBER Digest, the Bulletin on Health, the Bulletin on the Economics of Alzheimer's, and the Bulletin on Entrepreneurship—as well as research spotlights, lectures, and panel videos.

2026, 18th Annual Feldstein Lecture, Mark Duggan, "Social Security Reform in an Era of Fiscal Deficits" Primary tabs
2026, 18th Annual Feldstein Lecture, Mark Duggan, "Social Security Reform in an Era of Fiscal Deficits"
  • Feldstein Lecture
Mark Duggan, who is currently the Wayne and Jodi Cooperman Professor of Economics at Stanford University and will soon...
SI 2026 Methods Lecture
2026, Methods Lecture, Melissa Dell and Ashesh Rambachan, "Estimation and Inference with AI-Generated Data"
  • Methods Lectures
Research Associate Melissa Dell of Harvard University and Ashesh Rambachan of MIT delivered the 2026 Methods...
Using AI in Household Finance Research: A Practical Guide
2026, SI Household Finance, Paul Goldsmith-Pinkham, "Using AI in Household Finance Research: A Practical Guide"
  • Video
Supported by the Vanguard Group