In a Nutshell: How Money Moves Around the Banking System

#Money

Wed, Nov 27th, 2013 11:00 by capnasty NEWS

On the aptly titled website Thoughts on the future of finance, Richard Gendal Brown looks at the recent single Bitcoin transfer of circa $150 milions and uses it as an example to explain how money moves around the banking system.

There was much comment about how expensive or difficult [transferring almost $150m in a single Bitcoin transaction] would have been in the regular banking system — and this could well be true. But it also highlighted another point: in my experience, almost nobody actually understands how payment systems work. That is: if you “wire” funds to a supplier or “make a payment” to a friend, how does the money get from your account to theirs?

In this article, I hope to change this situation by giving a very simple, but hopefully not oversimplified, survey of the landscape.

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