Cleared funds are the funds that are available on an bank account and can be used in financial transactions. Several conditions of funds can be described:
- cleared funds - as defined above,
- pending funds - it is not possible to conduct transactions using them
- available funds - money available to depositors in banks (obligatory reserve)
Moving money between banks or selling securities can take some time. Sometimes even few days pass before the bank gets confirmation that the money was transferred. Until then the account is credited with the sum, but it is pending and not cleared. Therefore, such money cannot be used in transactions.
- Eichberger, J., & Summer, M. (2005). Bank capital, liquidity, and systemic risk. Journal of the European Economic Association, 3(2-3), 547-555.
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