CHIPS

Business & Finance abbreviation · Banking

CHIPS
Stands forClearing House Interbank Payments System
CategoriesBusiness & Finance

CHIPS stands for Clearing House Interbank Payments System, a banking abbreviation.

Private US system for large-value dollar payments between banks, operated by The Clearing House, which nets payments continuously and finalizes them the same day. It handles a large share of cross-border US dollar transactions.

Example: The correspondent bank routed the dollar payment through CHIPS before crediting the beneficiary in New York.

Usage notes

CHIPS processes on the order of $1.8 trillion a day, rivaling the Federal Reserve's Fedwire service. Launched in 1970, it uses a liquidity-saving algorithm so banks can settle large volumes with relatively little prefunded money. The Clearing House is owned by large commercial banks.

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