Payments between healthy and unhealthy banks
Research published by the Bank of England investigates payments behaviour towards a bank that is able to receive payments but unable to make them for operational reasons.
The theory advanced in this paper predicts that banks stop paying to a bank which has been unable to make payments early in the day when they are not sure about the payment instructions they might have to execute.
If the uncertainty is resolved later on in the day, healthy banks make payments even to a bank with an
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