Many banks and financial institutions offer a sweep account service for personal customers and small business owners.
[citation needed] In this system, the funds are described as being "swept overnight" into an investment vehicle of some kind.
Eurodollar sweeps are legal transfers of funds to the bank's offshore entities, although essentially they are just an accounting technique to allow the banks to have full lending of the funds without the reserve requirements normally required and without having to pay for FDIC insurance (as the sweep is uninsured).
The financial innovation of sweep accounts is particularly interesting because it was stimulated not only by the desire to avoid costly regulation, but also by a change in supply conditions – in this case technology.
For example, knowing when the checks they issue will probably clear, enables them to more precisely determine how to invest and for how long.