A ____________ must settle for an item with its administrative bank, whether or not it received the item from that bank. Settlement with its administrative bank is deemed to be settlement with the Reserve Bank that sent the item.

Question

Quizplus · Accepted Answer

This statement describes the responsibilities and obligations of a paying bank, which is the bank on which a check or other negotiable instrument is drawn and that pays the amount to the recipient. The paying bank must settle for the item with its administrative bank, which is the bank that has designated it as the paying bank for that item. This requirement ensures that there is an efficient and reliable system for settling transactions between banks, even if they are not directly connected to each other. Regulation J and Regulation CC are both federal regulations that govern the handling of checks and other negotiable instruments, but they do not specifically address this issue. A clearing agent is a third-party service provider that facilitates the processing and settlement of checks and other financial instruments, but it is not directly relevant to this question.

A ____________ Must Settle for an Item with Its Administrative