The CLS bank: a solution to the risks of international payments settlement?
AbstractForeign exchange transactions are subject to a unique type of settlement risk. This risk ultimately stems from the difficulty of coordinating separate settlements in two different currencies. Settlement of foreign exchange transactions through the proposed CLS (âContinuous Linked Settlementâ) Bank has been discussed as a potential solution to this problem. This paper describes the CLS proposal and analyzes the incentives it places on banks engaged in foreign exchange transactions. The analysis shows that while settlement through the CLS Bank may represent an improvement over current arrangements, some important problems associated with foreign exchange settlements will remain.
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Bibliographic InfoArticle provided by Elsevier in its journal Carnegie-Rochester Conference Series on Public Policy.
Volume (Year): 54 (2001)
Issue (Month): 1 (June)
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Web page: http://www.elsevier.com/locate/jme
Other versions of this item:
- Charles M. Kahn & William Roberds, 2000. "The CLS Bank: a solution to the risks of international payments settlement?," Working Paper 2000-15, Federal Reserve Bank of Atlanta.
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