### Question
Can you define what net obligation means?


### Answer
**Net obligation** is defined as the following in *12 U.S.C. § 4402*:

> the amount by which the covered contractual payment obligations of a financial institution or member exceed the covered contractual payment entitlements of the institution or member after netting under a netting contract

#### Citation:
  - *12 U.S.C. § 4402*
  - Heading: **CHAPTER 45-PAYMENT SYSTEM RISK REDUCTION > SUBCHAPTER I-BILATERAL AND CLEARING ORGANIZATION NETTING**

