How do bank Cheques work? How can a bank accept one from another bank, whilst having different standards, shapes, paper material? How is forgery not rampant?

Question

I cannot wrap my head around the security of Cheques. They have been around since forever (and I still don’t get how they got verified, although I can understand that fraud could have been way higher back then).

Is there a unified standard for them? Or a proof that it is valid from the government?

In: Economics

Answer 1

Hi, cheques after your bank gets them go through a “Clearing House”. Here they will carry out the checks on whether the cheque is valid, and if money is available to honor it .