text: consortium of180U.S.banksofwhich17usethesettlement feature of CashWire. Inaddition, large-value tt'ansfers aremadethrough cort'espondent banking relations, whicharehighlydeveloped intheUnitedStatesforusein domestic aswellasinternational transactions. (a)Fedwire• 18.Therulesgoverning Fedwire provide thatacredittt'ansfer isfinal between thesending b.nkandthereceiving bankandthereceiving bankhas available fundswhenthereceiving bank'sregional Federal Reserve Banksends thenoticeofthecredittoit.Thenoticeofthecreditissentby telecommunications tobankswhichareon-rlLne wlthFedwire and.thenoticemay begivenbytelephone, telexorsentbymailtoabankwhichisnoton-line. TheFedwlre rulesrequire thereeeiving banktocredititscreditparty promptly afterreceipt ofthenotice, buttherulesneither define howsoon thecreditmustbegiveninordertobepromptnordotheypurport togovern thetimeatwhichthetransfer isfinalastothecreditparty. • 19.Asaresultofthecredittransfer instructions whichabanksendsover Fedwire andtheotheractionsitmaytakeaffecting itsaccount, thebankmay runanintra-day orend-of-day debitbalance atitsregional Federal Reserve Bank.Inparticular, manybanksborrowovernight fromotherbanksinthe inter-bank fundsmarket. andreturnthosefundstothelending bankthenext morning. Thebort'owingbanks,which tendtobethelargemoney-centt'e banks, oftenrunlarge intra~day debitbalances intheiraccounts .withtheirFederal Reserve Bankthatarerestored tocreditbalance bytheendoftheday.Asis trueofanycorrespondent bank,theFederal Reserve Bank may refusetoaccept cr-edittransfer instructions fromabankindebitbalance untileitherithas received suffici~ntfunds torestore acreditbalance intheaccount oritis otherwise secured. However, ifadebitbalance doesresult, theFederal Reserve Bankcarries theentireriskofnon-reimbursement. Therefore, in addition toprotecting thereceiving bank,theFedwire rulesisolate the entirebanking andnon-bankins sector fromtheimmediate consequences ofa sending bank'sfailure tosettle.<• •A/CN.912661Add.1 English Page33 20.Thet."esultoftheFedwire rulewouldbethesameinregardtoany correspondent bankgoverned by asimilar finality rule,i.e.thecortespondent bankwouldbeartheriskifitirrevocably honoured acredittransfer instruction andthesending bankthereby incurred adebitbalance inits account withthecorrespondent bank.However, ifasending bankfailsto reimburse aprivately ownedcorrespondent bank,thereistheriskthatthe correspondent bankmayalsofailwithpotentially cascading effectthroughout thebanking system. Thisriskisnotpresent inFedwire sincethe correspon~ent bankisthecentral bank. (b)Private networks (i)Private network settlement rules 21.Allthreenetworks settlebyreport.ing thenet-net debitandcredit balances foralltransactions oftheirparticipants totheirregional Federal Reserve Bank.Thosebankswithadebitbalance transfer fundstoaspecial clearing account forthatnetwork, usually by aFedwire transfer fromtheir account withtheFederal Reserve Bank.Onceallthebanksinadebitposition havetransferred thefundsdue,theFederal Reserve Banktransfers the appropriate amounts byFedwire totheaccounts ofthosebankswithacredit balance. Thespecial clearing account carries nodebitorcreditbalance forward aftersettlement iscompleted. Oneoftherequirements oftheFederal Reserve Banksinestablishing thesettlement arrangements withthethree networks wasthattheReserve Bankswouldbearnosettlement riskarising out oftheexistence oftheclearing accounts. 22.Participants inCHIPSaredivided intosettling andnon-settling banks. Non-settling banksmustsettleanynetdebitbalance withoneofthesettling banks, andreceive anynetcreditsettlement through thatbank.Settling bankssettlethrough theclearing attheFederal Reserve Bankforthenet debitorcreditbalance arising outoftheirownfundstransfers andthoseof allthenon-settling banksforwhichtheysettle. 23.TheCHESSrulesaresimilar tothoseforCHIPSinthattheypermit a participant toSettlethrough another settling bankratherthanthroughits account withtheFederal Reserve Bank. (ii)Failure tosettle 24.Ifanybankfailstosettleitsdebitbalance fromCHIPSorCHESS transfers attheendoftheday,alltransactions tothatbankandfromitare withdrawn fromthesettlement andnewbalances arecalculated forthe remaining banks. Sinceotherbanksmay beunabletosettlefortheirnew debitbalance, theultimate procedure undertherulesisforageneral unwinding ofthesettlement. Inthatcase,settlement fortheday's transactions wouldhavetobearranged bytheparticipating banksona
analysis: The text appears to be discussing the rules and regulations governing the settlement of transactions between banks in the United States, particularly with regards to large-value transfers and the use of Fedwire and correspondent banking relations. It seems to be focused on the financial sector, highlighting the risks and procedures involved in ensuring the stability of the banking system. This suggests that the text is related to the topic of finance and banking.