In Search of Genuine DigiCash
Eric Hughes
hughes at ah.com
Sun Aug 28 23:34:18 PDT 1994
>In an off-line system, is the cash really cleared immediately?
Clearing in this case is when the cash passes from you to me.
This is a pretty non-standard usage of the word "clearing", which
happens when the issuer accepts the instrument for deposit.
Settlement happens when money actually moves.
The significant activity that happens at clearing is a liability
acknowledgement by the issuer. This acknowledgement makes clear that
the issuer has a liability. If the issuer clears but does not settle,
i.e. accepts the liability but does not act upon it, the depositor
can use the clearing as a claim against the issuer. (N.B. Here
'claim' is used in its strict legal meaning as the opposite of a
'defense'.)
Eric
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