We discuss initial research on a model of binaural hearing in which the peripheral transduction from acoustical waveforms to firing patterns on the auditory nerves is explicitly described. In most of this initial research, attention is focused on interaural time discrimination, and the processing that follows the peripheral transduction (the central processing) is assumed to be ideal. By imposing limitations on the central processing and computing the consequences for performance, we find that performance at least as good as experimentally observed performance can be achieved with central processing that is substantially restricted.