Which of the following is an advantage of a clearinghouse pa

Which of the following is an advantage of a clearinghouse payments system relative to a direct exchange of checks between banks. (More than one answer is possible During a financial crisis clearinghouses are able to create legal tender money Payments are guaranteed by the clearinghouse. Clearinghouses like central banks0an create reserves (ultimate money) for the entire banking system. During times of crisis, clearinghouse members can assist other members in adjusting their liquidity positions. Save Question 55 (1.4 points) The Crime of 1873 was a so-called crime against the fiat money interest

Solution

For the above question there are two answers. The first is that the clearing house guarantee payments and the second is that they are like central bankers who create reserves (ultimate money) for the entire banking system. This is done using the margin that these houses collect from the parties. Now given these margins, the payment is guaranteed to the parties who are suppossed to receive payments.

Clearing houses can\'t create legal tender money, the right of which lies with the central bank only and neither can clearing house members are not obligated to assist other members in adjusting their liquidity position.

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