[dubious – discuss] It is the process by which banks calculate the collective total of all transactions through designated times each day.
[4] In most payment systems this netting will take place on the clearing house books between the designated settlement times with final settlement of the net positions occurring when funds are debited or credited on its reserve account at a central bank.
The net obligations in the multilateral model are for A and C to each pay $25 into the settlement 'pot', and for B to receive $50.
[9] Net settlement is a multilateral transaction,[dubious – discuss] usually with the central bank for the currency being used.
[11] Examples of net settlement systems are CHIPS in the US, BACS in the UK[12] and BOJ-NET (until 2000)[13] in Japan.