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Inter-Network Clearing House
The Clearing House is a mechanism designed to facilitate trade among different Stable Credit networks, while mitigating counterparty risks involved in internetwork trade. In this sense, the Clearing House functions as a Stable Credit network of networks: while members of networks are obligated to clear purchases made on credit with sales to other members, networks as a whole are driven to clear “imports” (purchases from other networks) with “exports” (sales to other networks).
In order to achieve this, the Clearing House sets import limits for each participating network which reflect their demonstrated export capacity. Additionally, the Clearing House levies import fees on members of participating networks which fulfil a dual purpose: 1. Drive the inter-network market towards a balance of trade equilibrium, and 2. mitigate the risk carried by exporting networks (more under Export Risk).
When joining the Clearing house, participating networks are assigned the following variables and accounts:
- Proxy Account: mints and destroys Stable Credits involved in internetwork trade.;
- Balance of Trade (BoT): records a network’s Balance of Trade (imports vs exports).
- Export Limit: sets the maximal positive value a network’s BoT can accumulate.
- Import Limit: sets the maximum debt a network’s BoT can assume.