Minneapolis Fed research challenges banks’ reliance on short-term debt


An economic policy paper, published by the Federal Reserve Bank of Minneapolis on January 7, challenges the argument that banks must rely on short-term debt for the facilitation of financial transactions – arguing instead that "socially beneficial financial transactions can and should be provided at less cost and risk by both restricting and broadening the payments system."

Authors VV Chari and Christopher Phelan say short-term funding makes payment systems costlier and riskier than necessary.

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