Definition ∞ Cross-Bank Settlement denotes the final exchange of funds or assets between distinct financial institutions to complete a transaction. This process typically occurs through centralized clearing houses or interbank networks, ensuring that obligations between different banks are discharged. It represents a critical step in the financial system, verifying the transfer of value across institutional boundaries. Efficient cross-bank settlement reduces counterparty risk and accelerates transaction finality.
Context ∞ The discussion surrounding cross-bank settlement in the digital asset space centers on the potential for blockchain technology to modernize and streamline this traditionally slow process. Current systems often involve multiple intermediaries and significant delays, particularly for international transfers. A critical future development involves central bank digital currencies (CBDCs) and distributed ledger technology (DLT) solutions offering near-instantaneous and immutable settlement between banks, potentially reducing costs and operational complexities.
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