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Working Paper

Close but not a Central Bank: The New York Clearing House and Issues of Clearing House Loan Certificates

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The paper examines the New York Clearing House (NYCH) as a lender of last resort by looking at clearing-house-loan-certificate borrowing during five banking panics of the National Banking Era (1863-1913). In that system, adequate aggregate liquidity provision was passive and dependent upon member bank borrowing. We document bank borrowing behavior using bank-level data for clearing-house loan certificates issued to NYCH member banks. The historical record reveals that the large New York City banks behaved in ways that resembled those of a central bank in 1884 and in 1890, but less so in the more severe crises.
Topics
Financial crises
05.22.2013ISSN 2573-7953 WP 13-08DOI 10.26509/frbc-wp-201308
Keywords banking crises, lender of last resort, national banking era, New York Clearinghouse, clearing house loan certificates, interbank borrowing
JEL Classification Codes G01, G21, G23, N20

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Moen, Jon, and Ellis W. Tallman. 2013. “Close but not a Central Bank: The New York Clearing House and Issues of Clearing House Loan Certificates.” Federal Reserve Bank of Cleveland, Working Paper No. 13-08. https://doi.org/10.26509/frbc-wp-201308