Final answer:
To access the Clearing House Interbank Payment System, financial institutions must adhere to regulatory standards and have the necessary technical infrastructure, ensuring they contribute to a stable and reliable payment system.
Step-by-step explanation:
A financial institution must comply with various regulatory requirements and possess the necessary technical capabilities to access the Clearing House Interbank Payment System (CHIPS). As a system that plays a critical role in the payment system of the economy, banks participating in CHIPS must ensure they meet stringent standards regarding solvency, reliability, and adherence to financial regulations. This is imperative not only to safeguard individual savings but to maintain the integrity and stability of the financial system, a matter of great concern especially evident during the 2008-2009 financial crisis.
As financial intermediaries, banks reduce transaction costs by providing a place for savers to store their funds and for borrowers to secure loans, which facilitates economic transactions and helps in the overall creation of money. The CHIPS network is a large-scale payment processor for many of these transactions, and by being part of it, financial institutions can execute high-value and time-sensitive transfers internationally, contributing to the efficiency and safety of the payment system.