// definition
Netting
Offsetting obligations into net positions
Short definition
Agreed offsetting of obligations into net amounts payable or receivable under the applicable legal framework. In a fictional bilateral example, obligations of 100 and 90 in the same currency and at the same maturity leave a net payment of 10. Liquidity savings depend on which obligations can legally and operationally be included.
risk atlas
Knowledge map
Intuition
The net amount due differs from total gross payment turnover.
Related analyses
Primary sources
- ECB glossary: nettingAgreed offsetting and legal reduction of obligations to a bilateral or multilateral net amount.
- BIS/CPMI, settlement and liquidity requirementsPages 12–13: immediate settlement, netting and reuse of funds.