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Chips

• Is the Clearing House Interbank Payments System.

• The New York Clearing House's computerized Clearing House Interbank Payments System. Most Euro transactions are cleared and settled through CHIPS rather than over the Fed wire.

 
 Embedded terms in definition
 Clearing
Euro
Fed
Interbank
 
 Referenced Terms
 Clearing house interbank payment system: The most important wire transfer service; operated by international banking consortia.Banks and other financial intermediaries send most of their wholesale payments electronically either through Fedwire or Clearing House InterBank Payment System (Chips). All claims sent on CHIPS clear at the end of the day.Abbreviated Chips. An international wire transfer system for high-value payments operated by a group of major banks.

 Clearing house interbank payment system: The most important wire transfer service; operated by international banking consortia.Banks and other financial intermediaries send most of their wholesale payments electronically either through Fedwire or Clearing House InterBank Payment System (Chips). All claims sent on CHIPS clear at the end of the day.Abbreviated Chips. An international wire transfer system for high-value payments operated by a group of major banks.

 Euro feds: Eurodollars transmitted over the Fed wire instead of through Chips. Normally Euro Feds move from a foreign branch of one U.S. bank to a foreign branch of another U.S. bank, for example, from Citi Nassau to Morgan London. Foreign banks use CHIPS, not the Fed wire, to pay and receive Euros because they may not run daylight overdrafts at the Fed.

 Settlement risk: Banks and other financial intermediaries send most of their wholesale payments either through Fedwire or Clearing House InterBank Payment System (Chips). All claims sent on CHIPS clear at the end of the day. If a bank were to fail during the day, or send funds it does not yet have, this can create a chain of settlement problems for other banks who rely on these incoming funds.

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