What is a bank wire transfer?

A bank wire transfer refers to a method of transferring funds between banks or financial institutions, which often occurs electronically. Option C accurately describes this process as it highlights the transfer of funds within the Federal Reserve System, which underpins the operation of bank wire transfers in the United States. This system allows for real-time electronic transactions, enabling banks to transfer money quickly and efficiently between each other.

Wire transfers utilize a secure system like the Fedwire for the transfer of funds, which settles transactions on a gross basis in real-time. This method ensures that the funds are moved securely and can be completed within hours or even minutes, depending on the involved financial institutions. The Federal Reserve acts as a central clearinghouse, facilitating these transactions to ensure that they are conducted safely and efficiently.

In contrast, the other options do not accurately reflect the nature of a bank wire transfer. Cash withdrawals from ATMs are about accessing funds through physical banking machines, buying stocks electronically pertains to trading in securities rather than transferring funds, and issuing checks to clients involves a different process associated with physical checks rather than electronic funds transfer.