Do you really know why clearing is important?

Seems like a dumb question, right? But in all honesty how many of you out there can define clearing? And how many of you know the important role that clearing pays in the financial system?

In the financial 2007–08 financial crisis, the once mysterious topic of clearing of financial products took center stage in major policy debates. Generally speaking, clearing has to do with the nuts and bolts of the contractual performance of financial products after they have been traded.

Want to learn more? Download this insightful article “What is clearing and why is it important?” from the Chicago Fed.