Settlement Glossary
Fedwire
Fedwire is the Federal Reserve's real-time gross settlement system, which settles US dollar payments individually and irrevocably in central bank money during its operating day.
Fedwire is the settlement engine at the top of the US dollar system. Run by the Federal Reserve Banks, the Fedwire Funds Service settles payments one at a time, immediately, in central bank money: the paying bank’s reserve account is debited, the receiving bank’s is credited, and the transfer is final. It is the canonical example of real-time gross settlement, and nearly everything else in US payments ultimately anchors to it.
The scale is wholesale. In 2025, Fedwire settled 217.3 million transfers averaging roughly $4.6 trillion per business day, with an average transfer size of $5.28 million. Banks use it to settle securities purchases, fund positions at other systems, move liquidity between their own accounts, and execute the large-value legs of customer wire transfers. Retail networks like ACH and card systems settle their end-of-cycle net positions across Fedwire, which is what makes their deferred models safe: the final leg lands in central bank money.
Finality, at a price
The virtue of gross settlement is finality: every settled payment is done, individually, with no unwinding risk and no waiting for a netting cycle. The cost is liquidity. Settling gross means a bank needs funds available for each payment as it goes out, not just for its net position at the end of the day. That trade-off is exactly what the private-sector alternative, CHIPS, optimizes in the other direction with its netting algorithm, and most large US banks use both systems side by side.
Fedwire’s operating day is long but not continuous: it runs 22+ hours each business day and closes on weekends and holidays. In 2025 the service completed its migration to the ISO 20022 message format, aligning the US high-value rail with the standard used by other major systems.
Reach
Fedwire settles only US dollars between Federal Reserve account holders, so its reach ends at the US banking system’s edge; a cross-border dollar payment uses Fedwire (or CHIPS) for its US leg and correspondent banking relationships for the rest of the journey.
Common questions
- What is the Fedwire Funds Service?
- Fedwire is the Federal Reserve's high-value payment system. Banks with a Federal Reserve master account send payment instructions, and the Fed settles each one individually and immediately by debiting one bank's reserve account and crediting another's. Because settlement happens in central bank money, one payment at a time, a completed Fedwire transfer is final and irrevocable the moment it settles.
- How much value moves over Fedwire?
- In 2025 Fedwire settled 217.3 million transfers worth about $1,148 trillion in total, an average of roughly $4.6 trillion every business day across about 869,000 daily transfers, according to Federal Reserve Financial Services statistics. The average transfer was $5.28 million, which is why Fedwire is described as a wholesale rather than retail system.
- Is Fedwire the same as a wire transfer?
- A domestic US wire transfer usually settles over Fedwire, so the terms overlap in practice but are not identical. Wire transfer describes the product a bank offers its customer; Fedwire is one of the systems that settles it. A US wire can also settle over CHIPS, the private-sector alternative, and an international wire adds correspondent banking legs that Fedwire itself does not provide.
Related terms
Sources
Last reviewed 2026-07-16