Financial Stability Review
Payment and Settlement Systems Articles
1999
2005 2004 2003 2002 2001 2000 1999 1998 1997 1996
Counterparty
Credit Risk in Wholesale Payment and Settlement Systems
(235k)
(Issue 7, November 1999)
This article describes how counterparty credit exposures can arise in payments and settlement, distinguishing principal risk from replacement cost risk, and explains the role of central banks in taking action to address these risks. It examines measures to reduce or eliminate principal risk: real-time gross settlement in large-value payment systems; payment-versus-payment in foreign exchange settlement; and delivery-versus-payment in securities settlement. It also looks at ways of minimising or managing replacement cost risk: shortening settlement cycles, and the use of central counterparty clearing houses. The article concludes that further progress to tackle these risks should be a high and pressing priority in the United Kingdom and abroad.
Payments
Systems in Global Perspective
(56k)
(Issue 6, June 1999)
This article provides a broad overview of the fifth in an annual series of books discussing issues of common interest and concern to central banks. The book discusses the major questions of payment system design and management in an international context, drawing on experiences in developed/industrial, transitional and developing economies. The publication of the book was the culmination of an exercise organised by the Bank of England's Centre for Central Banking Studies (CCBS) that was supported by a major data collection exercise in which 70 central banks participated.
Central
Counterparty Clearing Houses and Financial Stability
(195k)
(Issue 6, June 1999)
Clearing houses are an increasingly important part of the modern financial infrastructure, with a growing number of financial markets taking advantage of the services that they provide. Central banks have a core interest in understanding the ways in which these developments change the distribution of risk and the possibility of systemic risk within financial markets. This article considers why demand for central counterparty services has arisen from market participants, how central counterparties alter the distribution and form of risk, the characteristics of markets for which they might be suitable, and their implications for financial stability more generally.
Key Resources
|
Memorandum of Understanding between HM Treasury,
the Bank of England and the Financial Services Authority
Download PDF (50k) |
