Clearing and settlement are separate
Client payments clear continuously on the digital ledger. The obligations they create settle afterwards, on demand or on a schedule. Separating the two allows payments to run around the clock. Clients see a payment complete once the two banks coordinate it, without waiting for a settlement window. The separation also makes the settlement rail a choice. Two banks agree on how they settle without changing how either bank clears. See Settlement Options.What accumulates between runs
Cross-bank transfers move value immediately and record an obligation at the same time. Those obligations accumulate until a settlement run discharges them. The exposure a bank carries between runs depends on two controls: settlement frequency and whether obligations settle gross or netted. More frequent settlement reduces exposure and increases settlement traffic. Netting reduces traffic and required liquidity, while increasing the position carried during the interval.What settles, and on what
Related
- Settlement Options for the available rails
- Atomic Settlement for all-or-nothing execution
- Delivery vs Payment for coupling an asset leg to a cash leg
- Finality for when settlement becomes irrevocable
- Settlement Asset Custody for 24/7 Payments for the stablecoin rail end to end