Clearing House Interbank Payments System (CHIPS),

Definition of Clearing House Interbank Payments System (CHIPS):

1. Electronic funds transfer system that handles over 95 percent of all international dollar payments. Located in New York City, chips settles transactions through adjustments in special account balances at the Federal Reserves Bank of New York City. See also SWIFT.

2. The Clearing House Interbank Payments System (CHIPS) is the primary clearing house in the U.S. for large banking transactions. As of 2015, CHIPS settles over 250,000 of trades per day, valued in excess of $1.5 trillion in both domestic and cross-border transactions. CHIPS and the Fedwire funds service used by the Federal Reserve Bank combine to constitute the primary network in the U.S. for both domestic and foreign large transactions denominated in U.S. dollars.

3. The Clearing House Interbank Payments System differs from the Fedwire transaction service in several respects. First and foremost, it is cheaper than the Fedwire service, albeit not as fast, and the dollar amounts required to use this service are lower. CHIPS is the main clearing house for large transactions; the average transaction that uses CHIPS is over $3,000,000.

How to use Clearing House Interbank Payments System (CHIPS) in a sentence?

1. CHIPS is slower but less expensive than the other major interbank clearing house known as Fedwire, making it more amenable to larger transactions that can take longer to clear.
2. CHIPS works by netting debits and credits across transactions, providing both clearing and settlement services to its customer banks.
3. The Clearing House Interbank Payments System (CHIPS) allows large interbank transactions in the U.S. to clear.