tl;dr: It is the same as the Good Funds Model.
Good funds settlement (also known as good funds model) is a term used in the financial industry to refer to a type of settlement process in which payment is made only after the funds have been received and confirmed as good. In a good funds settlement model, the funds are transferred in real time and are immediately available for use by the recipient, without the need for any further verification or confirmation.
Good funds settlement is commonly used for high-value and time-critical transactions, such as the transfer of funds between banks or the settlement of interbank transactions. It is a fast and efficient way of transferring funds, and ensures that the funds are available for use as soon as the transaction is complete.
The good funds settlement model is typically used in conjunction with real-time gross settlement (RTGS) systems, which are operated by central banks or other financial institutions and are used to facilitate the transfer of large-value payments between institutions. RTGS systems provide the infrastructure and security necessary to enable good funds settlement, and are an important part of the global financial system.
This page was last updated on June 28, 2023.