Settlement Velocity

Definition ∞ Settlement Velocity refers to the speed at which financial transactions are finalized and assets are transferred between parties. A higher settlement velocity indicates quicker completion of trades, reducing counterparty risk and improving capital efficiency. This metric is crucial for evaluating the performance and reliability of payment and securities settlement systems. It impacts market liquidity and operational risk.
Context ∞ Enhancing settlement velocity is a primary advantage touted by blockchain-based payment systems and digital asset transfers. A key discussion involves comparing the near-instantaneous settlement capabilities of distributed ledgers with traditional multi-day settlement cycles. Future developments will focus on leveraging these efficiencies to modernize global financial infrastructure and reduce systemic delays.