Bank Wire II

Clearing House Interbank Payment System (CHIPS)

Bank Wire II was established in 1978 as a successor to the original Bank Wire system that was formed in 1952. It is a private communications network built by the Rockwell-Collins Group and managed by a wholly-owned subsidiary of a consortium of commercial banks that are members of the system. The system now has approximately 190 subscribers located in 75 cities throughout the United States and Canada. Transaction volume is approaching 20 thousand items daily valued at over $20 billion. The primary data center is lcoated in Jersey City with a backup site in Dallas. The backup center is essentially a mirror center providing full backup. capability. In addition, uninterrupted power source (UPS) and backup generators are utilized. One proposed enhancement to the system will offer net settlement of accounts via a direct link to the FEDWIRE, providing for same-day-settlement of funds.

The Clearing House Interbank Payments System (CHIPS) is the principal mechanism for making international payments in the United States. CHIPS is a funds transfer network which was developed in 1970 by the New York Clearing House Association (NYCHA) to make the New York City payment system more efficient. The CHIPS network links approximately 100 financial institutions through leased lines to a central computer that updates records and produces balance position and item by item detail reports. Similar to FRCS-70, CHIPS uses a store and forward message switch to transmit interbank payments.

Although CHIPS handles foreign and domestic transactions, the system does not deal in currencies other than U.S. dollars. Approximately 50,000 transactions valued at over $150 billion are conducted each day on the request of U.S. and foreign financial institutions.

As of October 1981 CHIPS payments are settled on the same day that they are made. Financial institutions which are members of the NYCHA settle on their own behalf and for other participants (associate members)