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Netting


Definition
The settlement of obligations between two parties that processes the combined value of transactions. It is designed to lower the number of transactions required. For example, if Bank A owed Bank B $100,000, and Bank B owed Bank A $25,000, the value after netting would be a $75,000 transfer from Bank A to Bank B ($100,000 - $25,000).

Related Terms

Clearing House Interbank Payments System -  More

credit netting -  More

Related Terms on BusinessDictionary

bilateral netting
interest

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... part of the Banking subject.

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