What Is a Clearing Account?

A clearing account is also called an agreement account. The clearing banks of the two parties to the treaty countries shall open accounts for foreign exchange receipts and payments and the balance settlement in accordance with the agreed bookkeeping methods and clearing currencies in the name of each other. The foreign exchange transactions under the trade and non-trade terms of the two parties of the treaty country shall all be received and paid through the clearing account. There is no need to pay the spot exchange one by one. After the account balance is full, it shall be settled by cash exchange or materials in the method agreed between the two parties. ^[1]