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76 Results

An Exploration of First Nations Reserves and Access to Cash

Staff Discussion Paper 2021-8 Heng Chen, Walter Engert, Kim Huynh, Daneal O’Habib
Adequate cash distribution is one the Bank of Canada’s core interests. Canadians’ ability to access cash influences the Bank’s thinking on issuing a central bank digital currency. We provide a perspective on these issues by exploring access of First Nations reserves to cash.

Behaviour in the Canadian large-value payment system: COVID-19 vs. the global financial crisis

Staff Analytical Note 2021-7 Alexander Chaudhry, Anneke Kosse, Karen Sondergard
Unlike the 2008–09 global financial crisis, the onset of the COVID-19 crisis did not raise stress levels in Canada’s Large Value Transfer System. Swift changes to the Bank of Canada’s collateral policy and its large-scale asset purchase programs likely eased liquidity pressures in the system.

Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in Canada and the United States

Although credit cards are more expensive for merchants to accept than cash or debit cards, merchants typically pass through their costs evenly to all customers. Along with consumer card rewards and banking fees, this creates cross-subsidies between payment methods. Because higher-income individuals tend to use credit cards more than those with lower incomes, our results indicate that these cross-subsidies might lead to regressive distributional effects.

Estimating Policy Functions in Payments Systems Using Reinforcement Learning

We demonstrate the ability of reinforcement learning techniques to estimate the best-response functions of banks participating in high-value payments systems—a real-world strategic game of incomplete information.

Eggs in One Basket: Security and Convenience of Digital Currencies

Staff Working Paper 2021-6 Charles M. Kahn, Francisco Rivadeneyra, Tsz-Nga Wong
Digital currencies store balances in anonymous electronic addresses. This paper analyzes the trade-offs between the safety and convenience of aggregating balances in addresses, electronic wallets and banks.

Using Payments Data to Nowcast Macroeconomic Variables During the Onset of COVID-19

Staff Working Paper 2021-2 James Chapman, Ajit Desai
We use retail payment data in conjunction with machine learning techniques to predict the effects of COVID-19 on the Canadian economy in near-real time. Our model yields a significant increase in macroeconomic prediction accuracy over a linear benchmark model.

Safe Payments

In a cashless economy, would the private sector invest in the optimal level of safety in a deposit-based payment system? In general, because of externalities, the answer is no. While the private sector could over- or under-invest in safety, the government can use taxes or subsidies to correct private incentives.

Security and convenience of a central bank digital currency

Staff Analytical Note 2020-21 Charles M. Kahn, Francisco Rivadeneyra
An anonymous token-based central bank digital currency (CBDC) would pose certain security risks to users. These risks arise from how balances are aggregated, from their transactional use and from the competition between suppliers of aggregation solutions.

Predicting Payment Migration in Canada

Staff Working Paper 2020-37 Anneke Kosse, Zhentong Lu, Gabriel Xerri
Developments are underway to replace Canada’s two core payment systems with three new systems. We use a discrete choice model to predict migration patterns of end-users and financial institutions for future systems and discuss their policy implications.

What do high-frequency expenditure network data reveal about spending and inflation during COVID‑19?

Staff Analytical Note 2020-20 Kim Huynh, Helen Lao, Patrick Sabourin, Angelika Welte
The official consumer price index (CPI) inflation measure, based on a fixed basket set before the COVID 19 pandemic, may not fully reflect what consumers are currently experiencing. We partnered with Statistics Canada to construct a more representative index for the pandemic with weights based on real-time transaction and survey data.