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Working Papers

May 1988, No. 88-2

Legal and Regulatory Reform in Electronic Payments: An Evaluation of Finality of Payment Rules

David L. Mengle

Each day approximately $1.3 trillion changes hands by means of wholesale wire transfers. Of this total, about $638 billion is exchanged on Fedwire, the Federal Reserve wire transfer network, while just under $622 billion moves over the privately-owned Clearing House Interbank Payment System (CHIPS). On Fedwire, the average transfer is $2.9 million, while transfers on CHIPS average $4.6 million. With such substantial amounts involved in virtually instantaneous transactions, it is not surprising that concern has risen over risks that a large network participant will fail to settle its obligation to the network.

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