In the interbank market,the process of aggregating the currencies that one bank owes another and then carrying out that transaction is called ________.

Question

Quizplus · Accepted Answer

The process described in the question is called clearing. Clearing refers to the calculation and netting of obligations between banks, resulting in a single payment obligation for each participant. This helps to streamline transactions and reduce the number of transfers needed in the interbank market. Swapping refers to the exchange of one currency for another, hedging refers to a risk management strategy to mitigate potential losses, and dumping is not a term commonly used in the context of interbank transactions.

In the Interbank Market,the Process of Aggregating the Currencies That