SIC: Switzerland's New Electronic Interbank Payment System

to control risk on large-dollar wire transfer networks by means of quantitative limits. Net debit caps, as the limit.. are called, restrict the extent to which an institution can incur daylight overdrafts on Fedwire and net debits on the CHIPS network. The Federal Reserve is now considering additional steps such as reducing caps and pricing daylight overdrafts. In contrast, Switzerland took the bold step of prohibiting daylight overdrafts when it instituted its new wire transfer system, Swiss Interbank Clearing (SIC), in mid-1987. The following article, which details the Swiss experience and approach to daylight overdrafts, should be an important contribution to payment system policy discussions in the United States. Of course, certain institutional features of large-dollar wire transfer in the United States are different from those in Switzerland. For example, the number of participating depository institutions is far larger on Fedwire (almost 7,000) than on the Swiss system (156). In addition, Swiss banking is far more concentrated than is banking in the United States. But even so, the Swiss experience does suggest a new alternative that could be considered for the future of wholesale wire transfer in the United States