Clearing House Interbank Payments System (CHIPS)

CHIPS, which stands for Clearing House Interbank Payments System, is a private financial messaging and clearing system used by banks and financial institutions to settle cross-border transactions in US dollars.

The CHIPS system was established in 1970 by the New York Clearing House Association, which is a consortium of large US banks. The system is owned and operated by The Clearing House, a private financial services organization that provides payment, clearing, and settlement services to its member banks.

The CHIPS system works by enabling banks to send and receive payments to and from other banks in the network. These payments can be for a variety of transactions, including wire transfers, securities trades, and foreign exchange transactions.

The CHIPS system uses a standardized messaging format to ensure that transactions are processed accurately and securely. It also includes a variety of risk management and compliance tools to help banks manage risk and comply with regulatory requirements.

One of the key advantages of the CHIPS system is that it enables fast and secure settlement of cross-border transactions in US dollars. This can help facilitate international trade and commerce, as well as investment and capital flows.

The CHIPS system is used by over 70 global banks, including many of the world's largest financial institutions. It processes over $1.5 trillion in payments each day, making it one of the largest and most important financial messaging and clearing systems in the world.

Overall, CHIPS plays an important role in global finance by providing a reliable and efficient way for banks and financial institutions to settle cross-border transactions in US dollars. Its focus on security, risk management, and compliance helps ensure the integrity and safety of the global financial system.


In addition to the CHIPS system, The Clearing House also operates other payment, clearing, and settlement systems, including the National Settlement Service (NSS), which settles non-CHIPS transactions between US banks, and the Real-Time Payments (RTP) network, which provides instant payment capabilities to its member banks.

The Clearing House has also been exploring new technologies and innovations to enhance its services and better meet the evolving needs of its members. For example, the organization has been working on a new platform called the Digital Asset Shared Ledger (DASL), which aims to enable real-time settlement of securities transactions using blockchain technology.

The DASL platform is expected to significantly improve the efficiency and speed of securities settlement, while also reducing costs and risk for market participants.

Overall, The Clearing House and its systems, including CHIPS, play a critical role in the global financial system by providing secure and reliable payment, clearing, and settlement services to its member banks. Its focus on innovation and new technologies, as well as its commitment to security, risk management, and compliance, is helping to improve the speed, efficiency, and safety of global finance, while also supporting economic growth and development.

The Clearing House and its systems, including CHIPS, are subject to regulatory oversight by various regulatory bodies, including the Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Securities and Exchange Commission (SEC). These regulatory bodies help ensure that The Clearing House and its systems are operating in a safe, sound, and compliant manner.

One of the key challenges facing The Clearing House and other financial messaging and clearing systems is the increasing demand for real-time payment capabilities. In response, The Clearing House has been investing in new technologies and services, such as the RTP network, which provide faster, more efficient payment capabilities to its member banks.

The RTP network is designed to provide real-time, 24/7 payment capabilities to banks and their customers, enabling instant payments between accounts at different banks. This can help improve the speed and efficiency of commerce and other transactions, while also providing a more convenient and secure payment experience for consumers and businesses.

Overall, The Clearing House and its systems, including CHIPS, continue to play a critical role in the global financial system, providing essential payment, clearing, and settlement services to its member banks. Its focus on innovation, new technologies, and real-time payment capabilities is helping to drive the evolution of global finance, while also ensuring the safety, soundness, and integrity of the system.

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