Posted in Finance, Accounting and Economics Terms, Total Reads: 596
Fed wire is a real time gross settlement (RTGS) funds transfer system operated by the Federal Reserve Bank to enable electronic transfer of funds among its participants. Owned and operated by the 12 Federal Reserve Banks, the Fedwire is a networked system for processing the payment between the member banks themselves, or other Fedwire member participants. Members can consist of depository financial institutions in the United States, U.S. branches of certain foreign banks or government groups and should have an account with a Federal Reserve Bank.
Fedwire can be defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). 'Real Time' means the processing of instructions is done immediately at the time they are received and not at some later time. 'Gross Settlement' means the settlement of funds transfer instructions occurs individually on an instruction by instruction basis. Law enables the Fedwire to charge fees for use of the service. Both participants in a given transaction pay a small fee to facilitate the successful transaction.