What Is the Clearing House Interbank Payments System (CHIPS)?
The Clearing House Interbank Payments System (CHIPS) is the primary clearing house in the U.S. for large banking transactions. As of 2015, CHIPS settles over 250,000 of trades per day, valued in excess of $1.5 trillion in both domestic and cross-border transactions. CHIPS and the Fedwire funds service used by the Federal Reserve Bank combine to constitute the primary network in the U.S. for both domestic and foreign large transactions denominated in U.S. dollars.
KEY TAKEAWAYS
The Clearing House Interbank Payments System (CHIPS) allows large interbank transactions in the U.S. to clear.
CHIPS is slower but less expensive than the other major interbank clearing house known as Fedwire, making it more amenable to larger transactions that can take longer to clear.
CHIPS works by netting debits and credits across transactions, providing both clearing and settlement services to its customer banks.
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