Management, 1265 Military Trail, Toronto, ON, M1C 1A4, Canada
www.utsc.utoronto.ca/mgmt 1
MGEC71 – Writing Assignment
Money and Banking – FALL 2024
Due: On or before Tuesday, December 3rd, 2024, at 5pm (Toronto time)
Assignments must be placed in the department dropbox (on the second
floor of the IC-building directly outside of the office wing across from
the MESA office & just down the hallway from IC-230)
Instructions:
• You can submit an individual or group assignment.
• If you submit a group assignment, there MUST be no more than FIVE students in your group, and
you must submit ONE copy (with all group members’ names & student numbers on the cover).
YOU CAN WORK WITH STUDENTS ENROLLED IN ANY SECTION.
• A title page MUST be attached with your assignment; it MUST include your name(s), student
number(s).
• Please note that all the work must be completed by the group members. The use of AI tools, such as,
but not limited to, ChatGPT, is NOT allowed.
• Please upload your assignment as a single document stappled with the pages appearing in order.
• Your answer should be structured in a way such that those who know little about economics will have
no difficulty in understanding your argument/answer.
• The purpose of this exercise is to apply the relevant principles, ideas, and concepts covered in
this course to the analysis of a real-world event or issue.
• You are required to write a short paper that has at most 4-5 pages of written text (NOTE: This
count excludes the cover page & the page(s) with your sources) based on the following topic.
The report is worth 10% of your final grade.
Topic – The Real-Time Rail, Canada’s first real-time payment system
In class we studied how traditional banking systems, infrastructure, rules, and
regulations assist with the net settlement of cheques. Plus, some of the key
considerations that this process entails. You are tasked with reading about Canada’s first
real0time payments system being developed by Payments Canada (formerly the
Canadian Payments Association). That is read this article:
https://www.payments.ca/systems-services/payment-systems/real-time-rail-payment-
system
Along with other articles on this system

Management, 1265 Military Trail, Toronto, ON, M1C 1A4, Canada
www.utsc.utoronto.ca/mgmt 2
Then address write a brief 4–5 page report (not including the cover pages and list of all
sources used) that addresses the following questions:

Issues/Questions to be addressed:
1) Briefly outline what the proposed Real-Time Rail system is and how it differs from
existing payments systems supported by Payments Canada. That is, highlight how it
is like, but distinctly different than the existing system to support the settlement of
cheques.
2) Explain what is meant by clearing. Explain what is meant by settlement. Explain the
key differences between real time settlement and deferred settlement.
3) Explain how these two alternative forms of settlement introduce tradeoffs in how
they handle liquidity risk and credit risk. Don’t forget to briefly define these two
types of risk.
4) It should be noted that in the US a similar system from the US Federal Reserve (the
Fed) called FedNow is being set up as a voluntary system. That is, banks that are
regulated by the US Federal Reserve do not have to use FedNow unless they choose
to. What are the pros and cons of making this system voluntary instead of
mandatory?
5) Highlight any ways this new system might result in increased risks for banks, their
customers and/or the US Federal Reserve (US central bank). Describe what
recommendations you would provide regulators as to how they should act to
mitigate these risks.
6) Is it possible that Canada’s system by being made available to all chartered banks
may result in less risk & even more transaction cost saving than the US counterpart?
Explain why/why not.

Basic requirements:
• 4-5 pages: typed, double spaced (regular margins top/bottom & right/left margins)
with a 12-point font size.
• Reports must include: A cover page AND a list of sources used (neither of these
count towards the 4-5 page count total mentioned above).
• The reports can be done individually OR in groups of up to 5 people (in total)
from any section of MGEC71 this term.

Note
1) It is important that you cite ALL materials that you use (including web pages, i.e.,
cite the name of the web site and the URL address).
Management, 1265 Military Trail, Toronto, ON, M1C 1A4, Canada
www.utsc.utoronto.ca/mgmt 3

2) It is important that the report be written carefully, clearly, and concisely. This paper
is about the quality of your discussion and arguments rather than the quantity of
material you present.
3) No late submissions will be accepted AND all assignments must be submitted as a
single HARDCOPY document placed in the department DropBox.