It takes us back because of pre-funding trades. I dont know what the author means...
I read this whitepaper: http://perspectives.dtcc.com/articles/steampunk-settlement
In it, they mention that there only needs to be deposited cash of something like $8 billion to enable like $250 billion (I may be getting the exact numbers wrong) worth of trades on the NYSE because they can offset trades against each other as they come in and settle the trades hours after they are entered without needing cash at the moment the trade is placed. If cash was required at the moment of placing the order, much, much more cash would be required than is currently required.
Why not just have explicit credit instead of implicit credit?
I also assume that explicit credit is more expensive administratively than the kind of liquidity provided by a clearinghouse. I guess technically the NYSE (or whoever the clearinghouse for the NYSE is) is extending traders credit in the sense that it must believe they are good for the trades they make without requiring them to post full collateral for every trade, so in a way, it is explicit, it's just not bilateral between each pair of traders.
But also, I'm in way over my head here.