On the Ownership of Funds in Transit in the Payment and Settlement

Abstract

Payment and settlement will produce issues regarding funds in transit. When we study the ownership of funds in transit, we shall clarify the nature of monetary property, the ownership of deposit money and the significance of bank accounts. Money is independent property and it is not a “material object”. Its core is credited. Deposit money is based on bank accounts and it is liminal independent monetary property. Since a depositor deposits legal currency into a bank, the bank has gained the property rights to the legal currency while the depositor will get the control rights over the deposited currency. Deposit currency and statutory currency are in an equal and freely convertible relationship. This equal and freely convertible relationship and interest income are derived from the credit diminution rather than from anything else. To pay the settlement by using deposit currency will result in problems of funds in transit. Funds in transit are neither in the payer’s account nor the payee’s account. They are in the bank’s settlement process. Due to the homogeneity of currency, the control rights over funds in transit can only be held by the bank and the payer holds only statutory non-dominant rights.