In his July 1832 veto message of the bill rechartering the Second Bank of the United States, President Andrew Jackson triggered the demise of America's second central bank with a stroke of his veto pen.
Payments

Explore our research into the data, trends and innovations of payments and payment systems, including cash, checks, credit and debit cards.
Vanity McDaniel provides an update on FedNow, the first new payments platform launched by the Federal Reserve in 50 years, and why the Fed decided to facilitate real-time or "instant" payments in the financial system. McDaniel is a senior payments business advisor at the Federal Reserve Bank of Richmond.
Russell Wong discusses the emergence of stablecoin as an alternative to more volatile cryptocurrencies in the financial system. Wong is a senior economist at the Federal Reserve Bank of Richmond.
How might a CBDC alter the banking system? How does credit easing affect bank runs? These and other questions were addressed during a recent Richmond Fed conference.
Properly regulating stablecoins could achieve the same objectives as issuing a central bank digital currency.
When confidence in Terra's currencies was shaken, it created a freefall that couldn't be stopped.
Perhaps history can be a guide on whether central banks should issue digital currencies.
Even exploring a CBDC without ultimately issuing one can provide significant benefits.
Policymakers are weighing the possible benefits and risks of adopting a U.S. central bank digital currency (CBDC).
Vanity McDaniel and Zhu Wang review the Federal Reserve's important role in the payments system, from cash and check processing to supporting innovations in electronic payments. McDaniel is a senior payments business analyst in the Payments Outreach group and Wang is vice president for research in financial and payments systems in the Research Department at the Richmond Fed.
The recent removal of several Russian banks from SWIFT has sparked questions about unintended consequences.
In the last year, more than 10 percent of Americans have reportedly traded or bought cryptocurrencies, in part fueled by increased institutional adoption and public attention in the media. This increased engagement has captured the attention of both the general public and central bankers alike.
The U.S. is considered a leader in payment services, yet it has fallen behind countries like China and Kenya in mobile payment innovation.
Pengfei Han and Zhu Wang
Facebook and Amazon are examining creating digital currencies, like Alibaba has. What drives platforms to develop these currencies, and should central banks be worried?
Jonathan Chiu, Tim Sablik and Russell Wong
The U.S. might benefit from replacing physical cash with central bank digital currency, but first the Fed must resolve several policy and implementation issues.
We construct a dynamic model with sequential payment innovations to explain this phenomenon, which uncovers how advanced economies' past success in adopting card-payment technology holds them back in the mobile-payment race.
Pengfei Han and Zhu Wang
This paper studies a platform's business model choice between accepting cash and issuing tokens, as well as the implications for welfare, resiliency, and interoperability.
Jonathan Chiu and Russell Wong
Despite new technologies for electronic payments, cash has never been more popular. What's driving the demand?
Research at the Richmond Fed has exploited a large dataset of cash, check, credit card, and debit card transactions at a nationwide retail chain to examine consumer payment choice based on transaction size and location, day-of-week and day-of-month cycles, and longer-term trends.
New survey results suggest that the regulation has had limited and unequal effects on merchants. This Economic Brief discusses the causes of these findings as well as the implications of the regulation for end users.
Renee Haltom and Zhu Wang
A white paper published by the Fed in January advocates adding a new option to the payment system: a real-time electronic payment mechanism that would enable consumers and businesses to make payments instantly, cheaply, and safely.
John A. Weinberg
(Emeritus)
Richmond Fed president Jeffrey M. Lacker spoke about the use of the Bankruptcy Code to resolve large complex financial institutions.
Jeffrey M. Lacker
President, Federal Reserve Bank of Richmond
Are we losing the fight against next-gen bank robbers? The Fed's study found that payment cards were used in 92 percent of fraudulent transactions, with checks and electronic check transfers making up the remainder.
Richmond Fed President Jeffrey M. Lacker addressed business leaders during a luncheon hosted by the Rotary Club of Charlotte in Charlotte, N.C.
Jeffrey M. Lacker
President, Federal Reserve Bank of Richmond
Using three years of transactions data from a discount retailer with thousands of stores, we study payment variation along three dimensions: transaction size and location; weekly and monthly frequencies; and longer time horizons.
This issue looks at earned income tax credit (EITC) usage and its potential economic benefits within Fifth District zip codes.
Many merchants have complained that the fees far exceed issuers' costs for processing such transactions. In response to those complaints, Congress directed the Federal Reserve to impose a cap on debit card interchange fees.
Tim Sablik and Zhu Wang
This paper studies intended and unintended consequences of price cap regulation in the two-sided payment card market.
Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, addressed the Council on Foreign Relations on May, 9, 2013, as part of the C. Peter McColough Series on International Economics.
Jeffrey M. Lacker
President, Federal Reserve Bank of Richmond
Why do debit card networks base their fees on a percentage of transaction amounts when the marginal cost of executing a transaction does not vary by amount?
This paper explains why platforms such as Amazon and Visa rely predominantly on ad-valorem fees, fees which increase proportionally with transaction prices. It also provides a new explanation for why ad-valorem sales taxes are more desirable than specific taxes.
Zhu Wang and Julian Wright
This paper provides a new theory for two-sided payment card markets. Adopting payment cards requires consumers and merchants to pay a fixed cost, but yields a lower marginal cost of making payments.
James McAndrews and Zhu Wang
In recent years, large positive and negative balances have arisen in TARGET2, the interbank settlement and payments system of the Eurozone. These balances show that the Deutsche Bundesbank, the central bank of Germany, has become a large net creditor to the European Central Bank (ECB).
Thomas A. Lubik and Karl Rhodes
Rising interchange fees, along with the growing dominance of card transactions in the payments system, have brought increasing scrutiny from regulators on the appropriate level of interchange fees and the competitive aspects of card networks.
Tim Mead, Renee Haltom and Margaretta Blackwell
The use of electronic payment methods has increased rapidly over the last decade. Recent studies shed greater light on the forms these payments are taking — and why checks still serve a vital function for certain transactions.
T. Stuart Desch and Kiran Krishnamurthy
My main purpose today is to discuss the nature of innovation in lending, particularly at the retail end. As regulators, it is important for us to understand that innovation is an inherently risky activity, whether we are talking about a large, sophisticated institution that "invents" new products or processes, or a smaller community bank that innovates by putting new products or processes to use.
Jeffrey M. Lacker
President, Federal Reserve Bank of Richmond
I’m honored to have the opportunity to speak at this conference, although I must admit that I find the conference’s title a bit puzzling. I can certainly think of more than two conferences on payment economics. Why, the Richmond Fed alone has sponsored two; one in 2000 and one way back in 1987.
Jeffrey M. Lacker
President, Federal Reserve Bank of Richmond
In my remarks today, I will say a few words about payment economics, and then discuss the role of the Central Bank in the payment system and implications of that role for several current issues.
Jeffrey M. Lacker
President, Federal Reserve Bank of Richmond
The monetary and payment system consequences of the September 11, 2001, terrorist attacks are reviewed and compared to selected U.S. banking crises. Interbank payment disruptions appear to be the central feature of all the crises reviewed.
Alternative payment instruments are studied in an economy with private information, delayed communication, and limited commitment.
This paper develops a general equilibrium model of the clearing and settlement of private payment instruments.
A model in which both currency and stored value cards are used to make payments is presented. I compare steady-state equilibria with and without stored value cards.
The main result of this paper is a set of conditions under which the collateralized debt contract is the optimal allocation in this environment.
A costly 'facility' has a monopoly on the ability to coerce transfers and verify all private information. If invoked, the facility reads instructions recorded ex ante, and carries out the contingent transfers among agents, charging agents for the cost.
The evolution and structure of the payments system is explained by efficiency gains from substituting claims on particular institutions for commodity money.
With such substantial amounts involved in virtually instantaneous transactions, it is not surprising that concern has risen over risks that a large network participant will fail to settle its obligation to the network.
David L. Mengle
A model in which there is full contemporaneous adjustment of money holdings to transaction and opportunity-cost variables is shown to imply a positive coefficient on lagged money when these determinants are positively autocorrelated and contaminated with measurement error.
The major controversy in this literature is whether the observed reaction of interest rates reflects changes in the inflation expectations component or in the real rate component of the nominal rate.
Timothy Q. Cook and Thomas K. Hahn
The idea of totally deregulating the financial system and implementing monetary policy through currency control has received renewed attention.
In addition to its central banking responsibilities, the Federal Reserve System also plays an important role in correspondent banking.
Bruce J. Summers and John P. Segala