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    Money that can be transferred or withdrawn the same day that ...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 FAQS
  1. How do central banks acquire currency reserves and how much are they required to ...

    A currency reserve is a currency that is held in large amounts by governments and other institutions as part of their foreign ... Read Full Answer >>
  2. How have low interest rates affected lease rates in the automotive sector?

    Low interest rates have contributed substantially to increased lease rates in the automotive sector. In recent years, the ... Read Full Answer >>
  3. How are asset management firms regulated?

    In principle, the asset management industry is largely governed by two bodies: the Securities and Exchange Commission (SEC) ... Read Full Answer >>
  4. How is the interest rate on a treasury bond determined?

    The yield of U.S. Treasury securities, including Treasury bonds (T-bonds), depends on three factors: the face value of the ... Read Full Answer >>
  5. How much of the United States' money supply is M1?

    As of February 2015, the M1 money supply in the United States was $2,988.20 billion. This is based on figures reported by ... Read Full Answer >>
  6. When the Federal Reserve Bank engaged in Quantitative Easing, did it add to M1?

    When quantitative easing takes place, the money supply is increased, but quantitative easing does not directly boost the ... Read Full Answer >>
Related Articles
  1. 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. Investing

    Pockets Of Value In The Stock Market

    U.S. stocks benefited from signs the Fed’s path toward higher interest rates, as well as from continued merger-and-acquisition activity on of low rates.
  5. Economics

    Why Is The Federal Reserve Independent?

    An overview of the independent status of the Federal Reserve and arguments for and against it.
  6. Investing

    The Implications Of Negative Interest Rates

    If financial theory is grounded in one principal, it would be the that individuals prefer consumption today over consumption in the more uncertain future.
  7. Economics

    The Fed's Impact On Emerging Markets

    Higher US interest rates could make it more expensive for emerging market borrowers to service their debt commitments.
  8. Investing

    Welcome Back, Volatility

    Volatility is likely to resurface as the Federal Reserve gets closer to adjusting its monetary policy stance, even if that adjustment is a measured affair.
  9. Economics

    What’s Driving U.S. Stocks? Irony.

    A seesaw week for U.S. stocks ended on the upside last week, though the rally was more a function of slow growth rather than a booming economy.
  10. Economics

    What Do You Need To Know About Inflation?

    When it comes to inflation, there is no shortage of opinions: one side argues the Fed should raise rates, and the opposition says the Fed should stay put.

You May Also Like

Hot Definitions
  1. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  2. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  3. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  4. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  5. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
  6. Marginal Utility

    The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important ...
Trading Center