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Modelling Financial Instruments: Bearer Instruments

FinImage Data Solutions Limited - Data Solutions Expert > Blog > Uncategorized > Modelling Financial Instruments: Bearer Instruments

A key principle of a bearer instrument is that control of an asset equates to owning that asset.
If I hold this N1000 bill in my hand, you know I am the owner. But if I hand it to you, you are
now the owner by virtue of the fact that you now hold and control it.
• So here’s a pop quiz: now that I have handed you the N1000 bill, how do we go about
clearing and settling the transaction?
• With bearer instruments the payment is also the settlement. It is one step. This
property of a bearer instrument. But if the bearer instrument is physical, we have to
same room to achieve this.
is a neat
be in the
• But wait, don’t we have a digital payments system today? Not really. In almost all cases
have a digital messaging system, and those messages trigger a series of stewpes
across
multiple organizations: record, clear, settle, reconcile, etc.

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