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You did not _really_ "wire money to someone in <1h". Your bank signaled its willingness to move money to an other bank, who is in turn trusting enough of your

You did not _really_ "wire money to someone in <1h". Your bank signaled its willingness to move money to an other bank, who is in turn trusting enough of your bank to preemptively display that money as "received" while the actual settlement will happen the next day. Modern, traditional, banking and brokerage is not based on actual fund transfer, but on the layering of trust relationships and complicated settlement state machines to give the impression of instantaneous transfers. All operations done on money "just received" is done on margin, though at 0 cost.

PeterisP 4y ago
What you say is generally true for standard cross-border payments, however two financial institutions in a single market should be able to execute a fully settled deal in less than an hour, RTGS (real-time gross settlement) systems are one of the available options in pretty much every market. Fedwire in USA, Target2 across EU countries and other systems elsewhere will not use some layering of correspondent banks and settling cover payments/fees after some business days, it will be a fully settled transaction pretty much immediately.
- Galanwe 4y ago
  Indeed, I did not know that. Thanks for pointing it out!
- trog 4y ago
  Nice summary! In Australia our RTGS is called RITS (Reserve Bank Information and Transfer System) and settlement is generally instant[1]. It's relatively new (2018) but it is pretty amazing. Even before this our system wasn't too slow - I can barely remember but I think transactions were mostly always settled in a single business day. When I lived in the US (2013-2015) I was really surprised by how painful and slow it was to do a lot of basic banking stuff. 1. https://www.rba.gov.au/publications/bulletin/2018/sep/the-new-payments-platform-and-fast-settlement-service.html https://www.rba.gov.au/publications/bulletin/2018/sep/the-ne...
- toomuchtodo 4y ago
  Something to note is that the Fed is shaking out FedNow instant payments, and they go GA mid 2023. This is instant settlement of amounts up to $25k per transaction, ramping to $100k over time. It should be expected that FedWire persists (with somewhat slower settlement times) for greater amounts. It costs the bank a few cents per transaction (the service runs on a cost recovery model), but it’s expected this cost won’t be passed along to the customer due to cost savings over checks and ACH. https://www.frbservices.org/news/fed360/issues/100322/fednow-service-timing-and-full-scale-pilot-testing-begins https://www.frbservices.org/news/fed360/issues/100322/fednow...
postalrat 4y ago
However it worked I wired someone a few weeks back it and took an hour or so and cost me like $10. Beats bitcoin.

PeterisP 4y ago

What you say is generally true for standard cross-border payments, however two financial institutions in a single market should be able to execute a fully settled deal in less than an hour, RTGS (real-time gross settlement) systems are one of the available options in pretty much every market. Fedwire in USA, Target2 across EU countries and other systems elsewhere will not use some layering of correspondent banks and settling cover payments/fees after some business days, it will be a fully settled transaction pretty much immediately.

Galanwe 4y ago
Indeed, I did not know that. Thanks for pointing it out!
trog 4y ago
Nice summary! In Australia our RTGS is called RITS (Reserve Bank Information and Transfer System) and settlement is generally instant[1]. It's relatively new (2018) but it is pretty amazing. Even before this our system wasn't too slow - I can barely remember but I think transactions were mostly always settled in a single business day. When I lived in the US (2013-2015) I was really surprised by how painful and slow it was to do a lot of basic banking stuff. 1. https://www.rba.gov.au/publications/bulletin/2018/sep/the-new-payments-platform-and-fast-settlement-service.html https://www.rba.gov.au/publications/bulletin/2018/sep/the-ne...
toomuchtodo 4y ago
Something to note is that the Fed is shaking out FedNow instant payments, and they go GA mid 2023. This is instant settlement of amounts up to $25k per transaction, ramping to $100k over time. It should be expected that FedWire persists (with somewhat slower settlement times) for greater amounts. It costs the bank a few cents per transaction (the service runs on a cost recovery model), but it’s expected this cost won’t be passed along to the customer due to cost savings over checks and ACH. https://www.frbservices.org/news/fed360/issues/100322/fednow-service-timing-and-full-scale-pilot-testing-begins https://www.frbservices.org/news/fed360/issues/100322/fednow...

postalrat 4y ago

However it worked I wired someone a few weeks back it and took an hour or so and cost me like $10. Beats bitcoin.