Settlement risk in foreign exchange markets and CLS Bank

Gabriele Galati

BIS Quarterly Review, 2002

Abstract: In September 2002, CLS Bank, a new financial institution set up to reduce the risk involved in settling foreign exchange transactions, began operation. This article describes how settlement risk arises, and how central banks and market participants have tried to reduce it. After reviewing the initiatives taken over the last two decades, the article discusses the background to the formation of CLS Bank and its likely effect on relevant risks.

Date: 2002
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Citations: View citations in EconPapers (22)

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