In financial terms, it refers to the process of making good on an obligation, such as transferring the funds from the writer of a cheque to the receivor of the cheque.
To remove from current memory previous numbers or results in an adding machine.
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In banking and finance, clearing denotes all activities from the time a transaction is made until it is finally settled (see settlement).
Some of the activities in clearing are reporting/monitoring, risk margining, netting of trades to single positions, tax handling, and failure handling.
Clearing generally involves the use of a well capitalised financial institution known as a central counterparty (CCP).
They attribute what appears to be imperfect clearing to factors like labor unions or government policy, thereby exonerating the clearing mechanism.
That is, there may be path dependence, as when a long depression changes the nature of the "full employment" period that follows.
For example, in the theory of "efficiency wages," a labor market can be in equilibrium above the market-clearing wage, since each employer has the incentive to pay wages above market-clearing to motivate their employees on the job.
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