payment clearing networks

                    Summary
    A payment clearing network is an arrangement for the clearing of payments
    between banks. A Markow chain is formulated depicting the dynamic flow of
    payments. The concept of bank float is defined and formulas for calculating bank
    float are given.
    A computer simulation of an on-line clearing system is described, explaining the
    systems architecture and the output reports.
    What happens to the cash flow of commercial banks when clearing times are
    reduced due to the installation of on-line facilities? Formulas are developed for
    calculating the changes in bank float, and the effects upon bank cash flow.