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Banks already do some of that locally and internationally.

In South Africa we have BankServ, which is a local interchange and clearing house. Transactions are still in batches, but the settlement between banks happens nett between the local banks.

Internationally, MasterCard, VISA, Amex etc. manage the clearing. Banks then have to pay within 2 days via Swift to either other banks or their designated international settling bank.

Going back to your suggestion, it could work because the banks could just pay each other when they run out of funds. The challenge becomes fraud and other legal issues, which often mandate settling houses.

The real-time problem is a legacy hardware problem as well as the settling issue. On your last point, money is normally parked at the Central Banks, mostly as a legal requirement. From my experience, banks in healthy financial economies like mine don't keep a lot more than the minimum cash reserve with the Central Bank.




> Transactions are still in batches, but the settlement between banks happens nett between the local banks.

Same thing in Sweden, I believe. Cleared through Bankgirot.

https://en.wikipedia.org/wiki/Bankgirot




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