A certified check (or certified cheque) is a form of
check for which the bank verifies that sufficient funds exist in the payer's account to cover the check, and so certifies, at the time it is written. Those funds are then set aside in the bank's internal account until the check is cashed or returned by the payee. Thus, a certified check cannot be stopped or bounce, and, in this manner, its liquidity is similar to cash barring bank failure or an illegal act (such as the funds being based on a fraudulent loan, at which point the check will be disavowed).
In some countries (e.g.,
Germany
Germany, officially the Federal Republic of Germany, is a country in Central Europe. It lies between the Baltic Sea and the North Sea to the north and the Alps to the south. Its sixteen States of Germany, constituent states have a total popu ...
), it is illegal for a regular
bank
A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...
to certify checks.
[Art. 4 of the German Cheque Code (Scheckgesetz)](_blank)
/ref> This regulation is supposed to prevent certified checks from becoming a universal substitute for cash, which is considered the only legal tender
Legal tender is a form of money that Standard of deferred payment, courts of law are required to recognize as satisfactory payment in court for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything ...
. In the case of Germany, the Deutsche Bundesbank
The Deutsche Bundesbank (, , colloquially Buba, sometimes alternatively abbreviated as BBk or DBB) is the National central bank (Eurosystem), national central bank for Germany within the Eurosystem. It was the German central bank from 1957 to 19 ...
(Federal Bank) is the only financial institution authorized to issue certified checks.
Because of the liquidity and certainty of payment of a certified check, it is sometimes considered equivalent to cash such as in the regulation of credit for casino gaming in Macau
Macau or Macao is a special administrative regions of China, special administrative region of the People's Republic of China (PRC). With a population of about people and a land area of , it is the most List of countries and dependencies by p ...
where the law explicitly states that, if a casino patron obtains casino chips and pays with a certified check, the transaction is not regarded as credit for gaming (see Law 5/2004, art. 2).
It is possible to counterfeit or forge a certified check in which case it is not binding on the bank; see cashier's check for an exploration of associated risks.
See also
* Cashier's check
* Certified funds
References
External links
Definition at law.com
Cheques
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