Economics of Money and Banking

TOTAL POINTS 6 1. Which of the following is NOT an advantage of the clearinghouse system relative to a bilateral system of bank payments? Payments are guaranteed by all clearinghouse members In a bilateral system, failure of one bank to settle with its correspondents can have a ripple effect by making it impossible for the other bank to settle also Banks net payments across their various correspondents O Clearinghouses do not permit negative balances intraday During financial crises, clearinghouses are able to create additional reserves