Multilateral netting system

Multilateral netting system

Elimination of offsetting cash flows between a parent and several subsidiaries.
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Thus, relatively modest end-of-day net settlement amounts in a multilateral netting system (zero in this example) may disguise substantial intraday credit exposures faced by individual banks.
The other is a periodic multilateral netting system. In the United States, the two major large-value payments systems are Fedwire, an RTGS system, and CHIPS, a netting system.
Since it implemented daylight overdraft fees, the Federal Reserve has taken additional steps to help control risks in the payment system, most recently in the area of multilateral netting systems. The November 1990 Report of the Committee on Interbank Netting Schemes of the Central Banks of the Group of Ten Countries (commonly referred to as the "Lamfalussy Report," after the committee's chairman, Alexandre Lamfalussy) identified six minimum standards that should be met by multilateral netting systems.
The committee has also discussed proposals by groups of banks in Europe and North America to create clearing houses (multilateral netting systems) for foreign exchange contracts.
Second, similar arrangements have been designed to reduce credit risks and liquidity risks: multilateral netting systems and delivery-against-payment systems.
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