Introduction to CHIPS:

Fast & Secure Money Transfer

What is CHIPS?

-CHIPS stands Clearing House Interbank Payments System

-A financial institution that facilitate the settlement of trades and transactions in financial markets

-Works as an intermediary between buyers and sellers of financial instruments

-Operates on a RTGS basis, meaning transactions are settled immediately without any delay

How Does CHIPS Work?

-CHIPS helps banks send big amounts of money to each other quickly and safely.

-The sending bank tells CHIPS the details of the transaction.

-CHIPS checks the details to make sure everything is right.

-If everything is okay, CHIPS moves the money from the sending bank to the receiving bank. This
happens right away, in real time.

-Both banks gets a confirmation that the transaction is done.

-The money is sent and received securely and quickly .In short, CHIPS is like a fast and secure highway for
money between banks!

Features of CHIPS

Real-Time Settlement

High Value Transactions

Liquidity Management

Security

Regulation and Oversight

International Connectivity

Benefits of CHIPS

Fast Money Moves: CHIPS helps banks send money to each other quickly

Secure Transactions: It makes sure the money is sent and received safely
No Waiting: Transactions happen in real time, instantly.

Big Payments: CHIPS is used for large amounts of money.

Bank Confidence: CHIPS makes sure transactions go well, boosting trust between banks.

No Mistakes: It checks all details, reducing errors in transfers.

Immediate Confirmation: Both banks know the money transfer is complete.

Stability: It adds to the stability of the financial system

Disadvantages Of CHIPS

Limited to the U.S.: CHIPS works only within the United States, making it unsuitable for international
transactions

Costly for Small Transactions: It might be expensive for smaller transactions due to its focus on larger
amounts.

Dependent on Technology: Technical issues or cyberattacks could disrupt the system.

Potential for Errors: While it tries to minimize errors, human mistakes can still happen.

Timing Constraints: CHIPS transactions are typically processed during specific hours. If you need to make
a payment outside these hours, you'll have to wait.

Risk of Rejected Transactions: CHIPS involves various checks and verifications. If any discrepancy is
found, your transaction could be rejected, causing delays

Recent developments

Technological Advancements

Instant Payments

Blockchain and Distributed Ledger Technology (DLT)

Cross-Border Connectivity

Regulatory Changes

Collaboration and Partnerships

Sustainability and ESG Considerations

Members of CHIPS

Bank of America, N.A. (United States)

Bank Leumi USA (United States)

Brown Brothers Harriman & Company (United States)

Citibank, N.A. (United States)

Habib American Bank (United States)

HSBC Bank USA (United States)

Israel Discount Bank of New York (United States)

Conclusion

-Serves as an essential tool for banks to transfer substantial sums swiftly and safely, ensuring the smooth
functioning of the financial sector.

-As payment technology continues to evolve, CHIPS may face challenges from emerging alternatives.

-But its position as a foundation for interbank transfers remains vital

-Ultimately, the effectiveness of CHIPS depends on aligning its capabilities with the specific needs of the
banking industry and its customers.