| Eighteen million times a day, Canadians
withdraw cash from banking machines and use cheques, debit cards and
pre-authorized payments or make other payments that result in one
financial institution owing money to another. These transactions must be
sent to the financial institution holding the account on which the funds
are drawn in the case of a debit payment item, such as a cheque, or to
the financial institution holding the account in which they are to be
deposited in the case of a credit item, such as a direct deposit. The
process through which CPA member financial institutions exchange the
payment items, whether in paper or electronic form, is referred to as
clearing. Flows of value in one direction are netted
against flows in the opposite direction, and the financial institutions
involved settle for the net amounts through their accounts
at the Bank of Canada. These processes of clearing and settlement are
central to the operation of the national payments system.
The CPA currently operates two systems for the clearing and
settlement of payments: the
Automated Clearing Settlement System (ACSS) and the
Large Value Transfer System
(LVTS). In addition, the U.S. Bulk
Exchange (USBE) system, a parallel system to the ACSS, is used for
the clearing of payment items in U.S. dollars. Settlement of USBE
balances is carried out through correspondent banks in New York. |
