Money & Finance › Payments & money movement › Wire transfers: same-day, final and hard to reverse
CHIPS: the big banks' private dollar wire system
Since 1970· Institution or agency
Fact, law or dataA rule, statute, definition or measured number.
A private wire system run by The Clearing House that nets big banks' dollar payments, especially the dollar side of international deals.
See it on the Money & Finance map →How it works
Started in 1970 by New York banks to replace paper, CHIPS links roughly 40–50 large US and foreign banks. Each morning members prefund their positions through Fedwire. During the day an algorithm matches and offsets payments running in opposite directions, so a small pool of money settles a far larger gross flow, and each released payment is final. In 2025 CHIPS averaged about $2 trillion a day. A large share of the dollar legs of currency trades and cross-border wires passes through it.
Why it matters
With Fedwire it forms the core of dollar clearing; US regulators designated it systemically important in 2012.
Facts, rules and data
The Clearing House's annual CHIPS statistics and rules, the Financial Stability Oversight Council's 2012 designation of systemically important utilities, and Federal Reserve oversight reports.
Debates and risks
How much of global dollar trade it actually handles: often-quoted shares near 95% of cross-border dollar payments are not officially confirmed.
Connections (4)
▸CHIPS: the big banks' private dollar wire system clears most large international dollar Wire transfers: same-day, final and hard to reverseFact, law or data
The connection
When a German company pays a US supplier in dollars, its bank's US correspondent often sends the payment over CHIPS rather than Fedwire, because CHIPS netting needs less cash. The dollar side of currency trades and many cross-border wires settle there, reaching the beneficiary's US bank the same day.
When and why
In New York since 1970; about $2 trillion a day in 2025 among roughly 40–50 large US and foreign banks.
How we know
The Clearing House's CHIPS statistics, Fed and FSOC reports, and payment messages that carry CHIPS participant identifiers.
Debates and risks
Whether stablecoins or linked foreign instant-payment systems will pull cross-border dollar flows away from CHIPS, or simply settle through the same banks.
▸CHIPS: the big banks' private dollar wire system nets payments, then settles via Fedwire Funds Service: the Fed's wire systemFact, law or data
The connection
Members prefund a CHIPS account at the Fed each morning by Fedwire. CHIPS's algorithm then releases payments when offsetting flows allow, so a small prefunded pool settles a gross flow many times larger. At day's end, unreleased payments are netted; members with shortfalls send Fedwire funds, and CHIPS pays out remaining balances by Fedwire, ending the day flat.
When and why
Daily in New York; since 2001 CHIPS has given real-time finality using a prefunded account at the Federal Reserve Bank of New York.
How we know
CHIPS rules and public disclosures under international standards for payment systems, and Fed oversight descriptions of the prefunded balance account.
Debates and risks
How CHIPS would cope if a large member failed mid-day; results of stress scenarios are only partly disclosed.
▸CIPS: China's cross-border yuan payment system (2015) is China's yuan counterpart to CHIPS: the big banks' private dollar wire systemFact, law or data
The connection
Both clear large payments between banks in one currency. CHIPS, owned by big banks through The Clearing House, settles about $1.8 trillion of dollar payments a day. CIPS, backed by China's central bank, settled about 180 trillion yuan, roughly $26 trillion, in all of 2025: about three weeks of CHIPS traffic.
When and why
CHIPS in New York since 1970; CIPS in Shanghai since October 2015.
How we know
The Clearing House and CIPS each publish volume statistics, so their sizes can be compared directly.
Debates and risks
Whether CIPS volumes reflect genuinely new demand or China steering existing yuan trade through its own pipes.
▸CHIPS: the big banks' private dollar wire system is owned, through The Clearing House, by big Commercial banks: taking deposits, making loansFact, law or data
The connection
CHIPS belongs to The Clearing House Payments Company, owned by about two dozen of the largest commercial banks. Those banks and big foreign banks with New York branches are its participants. Owning the network lets them clear dollar payments at low liquidity cost, and the same owners run the RTP network.
When and why
The New York Clearing House Association dates to 1853; CHIPS launched in 1970.
How we know
The Clearing House's ownership disclosures and the Financial Stability Oversight Council's 2012 systemic designation.
Debates and risks
Whether bank ownership of key payment networks favors big banks over small ones, an argument raised in the debate over FedNow.