Clearing refers to the process of confirming and matching transaction details before funds and assets are exchanged. Settlement is the subsequent step where the actual transfer of assets and money occurs, finalizing the transaction. These two stages ensure the accurate and secure completion of financial trades, reducing risk for all parties involved. Efficient clearing and settlement are fundamental to the smooth functioning of any financial market.
Context
Within digital asset markets, clearing and settlement mechanisms are evolving rapidly, with blockchain technology offering potential for near-instantaneous finality. Traditional finance news often highlights the inefficiencies of legacy systems, while crypto news focuses on innovations that could streamline these processes. The adoption of distributed ledger technology for clearing and settlement presents a significant area for future market infrastructure enhancements and regulatory consideration.
Modernizing the €310B short-term debt market via DLT and wCBDC integration will unlock T+0 settlement and dramatically lower systemic counterparty risk.
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