The Diffusion of Payment Time and Economic Resilience in Recessions — An Analysis Based on the Cash Conversion Cycle —

Abstract This paper reframes economic recessions not as simple shortages of money or declines in aggregate demand, but as situations in which the temporal structure of money flows between economic agents becomes dispersed and delayed, generating cascading disruptions. In business practice, recessions are often preceded not by an immediate disappearance of money, but by delays in settlement, extensions of payment terms, and growing uncertainty regarding the timing of cash inflows. These delays propagate across firms through accounts receivable and payable, amplifying liquidity stress and leading to bankruptcies and employment losses.Using the Cash Conversion Cycle (CCC) as an indicator of the time required for money to circulate, this paper develops a simplified quantitative framework to illustrate how changes in payment time affect working capital demand, firm failure probability, and unemployment during downturns. Rather than advocating uniform instant settlement, the paper argues that allowing heterogeneous payment structures—balancing robustness and immediacy depending on users and purposes—can enhance economic resilience. The analysis does not propose specific policy measures, but provides a conceptual foundation for evaluating the practical feasibility of complementary digital settlement instruments, such as a yen-pegged digital currency, as institutional supplements to existing monetary arrangements.