Interbank Clearing

Definition ∞ Interbank clearing refers to the process by which banks exchange and settle payments among themselves. This system facilitates the transfer of funds between different financial institutions, ensuring that debits and credits are accurately recorded and resolved. Traditionally, this involves centralized clearinghouses or correspondent banking networks. In the context of digital assets, new blockchain-based solutions are being explored to streamline this process, potentially offering faster, cheaper, and more transparent settlement. It forms the backbone of the global financial transaction system.
Context ∞ The traditional interbank clearing system faces challenges related to speed, cost, and cross-border efficiency, which blockchain technology aims to address. Central bank digital currencies (CBDCs) and wholesale stablecoins are being investigated as potential mechanisms to modernize interbank settlements, offering near-instantaneous transfers. A key discussion involves the regulatory frameworks required to support such innovations and ensure financial stability. Future developments are likely to see increased adoption of distributed ledger technology for interbank transactions, potentially transforming global payment infrastructure.