Fedwire

AAA

DEFINITION of 'Fedwire'

A real-time gross settlement system (RTGS) of central bank money used in the United States by its Federal Reserve Banks to settle final payments in U.S. dollars electronically between its member institutions.

Owned and operated by the 12 Federal Reserve Banks, the Fedwire is a networked system for payment processing between the member banks themselves, or other Fedwire member participants. Members can consist of depository financial institutions in the United States, as well as U.S. branches of certain foreign banks or government groups, provided that they maintain an account with a Federal Reserve Bank.

INVESTOPEDIA EXPLAINS 'Fedwire'

While the Fedwire is not managed for a profit, law does mandate the Fedwire charge fees for use of the service in order to recoup costs. Both participants in a given transaction will pay a small fee.

The Fedwire system processes trillions of dollars daily, and it includes an overdraft system covers participants with existing and approved accounts. It has been in operation in some format for nearly 100 years, and as such, the Fedwire system is designed to be highly reliable. It often processes high dollar values, and critical recurring payments domestically and abroad.

RELATED TERMS
  1. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  2. Telegraphic Transfer - TT

    An electronic method of transferring funds. Telegraphic Transfers ...
  3. Same-Day Funds

    Money that can be transferred or withdrawn the same day that ...
  4. Regulation J

    A regulation set forth by the Federal Reserve. Regulation J establishes ...
  5. Clearing House Interbank Payments ...

    The primary clearing house in the U.S. for large banking transactions. ...
  6. Bilateral Credit Limit

    Intraday credit limits set by two institutions for use with one ...
Related Articles
  1. The global interconnection of U.S. payment systems makes commerical and financial transfers possible.
    Economics

    Inside National Payment Systems

    Investopedia explains: The global interconnection of U.S. payment systems makes commerical and financial transfers possible.
  2. Forex Education

    Get To Know The Major Central Banks

    The policies of these banks affect the currency market like nothing else. See what makes them tick.
  3. Forex Education

    Dollarization Explained

    Find out how fledgling economies can find some stability in their currency and attract foreign investment.
  4. Forex

    How do central banks acquire currency reserves and how much are they required to hold?

    A currency reserve is a currency that is held in large amounts by governments and other institutions as part of their foreign exchange reserves. Reserve currencies usually also become the international ...
  5. Economics

    What's the highest year-over-year inflation rate in the history of the U.S.?

    Learn about periods with the highest inflation in U.S. history and the mandated role of the U.S. Federal Reserve in controlling inflation.
  6. Quantitative easing in Europe is coming, but too slowly to avert a severe slowdown and perhaps even a hard landing.
    Economics

    How Is Europe Affecting The Martkets?

    Quantitative easing in Europe is coming, but too slowly to avert a severe slowdown and perhaps even a hard landing.
  7. Economics

    What are the main components of the Federal Reserve's balance sheet?

    Find out which items are listed as assets and liabilities on the balance sheet of the Federal Reserve, and how to read the Fed's weekly financial report.
  8. Investing Basics

    What's the lowest year-over-year inflation rate in the history of the U.S.?

    Learn about years with the lowest year-over-inflation in U.S. history. Read about how inflation is calculated using the consumer price index or estimates of it.
  9. Economics

    How do leverage ratios help to regulate how much banks lend or invest?

    Learn what leverage ratios mean for banks, how regulators restrict leverage, and what impact ratios have on a bank's ability to lend or invest.
  10. Bonds & Fixed Income

    What methods can the government use to control inflation?

    Find out what inflation is, what a government can do to control it, and how the results of those actions help or hurt the economy overall.

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center