clearing cycle

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The process by which a payment made by cheque, etc., through the banking system is transferred from the payer's to the payee's account. Historically, in the UK the average time for the clearing cycle to be completed was three days, although by 1994 this had been reduced to two days in many cases. However, with this reduction in the cycle, the payee's bank may not have received confirmation from the payer's bank that funds are available to provide value, cleared for fate.

Subjects: Economics.

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