> Would a cheque from A to B show no loss from book for A for the 7 to
> 8 day period? While at the same time a gain /will/ show to the book
> for B as soon as it is presented to a teller or a machine (whether
> or not access is made available to the recipient of the cheque as it
> /is/ *placed in one's account* but is not accessible)? Thus
> providing a /better day-end or month-end/ for each financial
> institution.
The money is in two places at once or there is twice as much money,
depending on how you want to look at it.
In cheque clearing, banks refer to bank float and customer float. Bank
float is the time it takes to clear the item from the time it was
deposited to the time the funds were credited to the depositing
bank. Customer float is defined as the span from the time of the
deposit to the time the funds are released for use by the
depositor. The difference between the bank float and the customer
float is called negative float. Negative float is used by the bank as
the overnight investable funds.
http://en.wikipedia.org/wiki/Float_(money_supply)
The US law of 2004 was supposed to severely reduce the bank float and
there's a lot of advice out there for biz types (who were depending on
exploiting it as a means of free financing) on how to cope. I didn't
know there was a week-long customer float.
- Mike
--
Michael Spencer Nova Scotia, Canada .~.
/V\
[email protected] /( )\
http://home.tallships.ca/mspencer/ ^^-^^
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