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International settlements: a new source of systemic risk?

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  • Robert A. Eisenbeis

Abstract

Recent market developments have heightened concerns about the potential for systemic risk in the payments system. At the same time that markets are becoming more integrated and global in scope, they are becoming more segmented in the sense that there is a growing separation evolving between the clearing and settlement of transactions that raises the prospect of a need to invoke the safety net and introduces a possible distortion into the international payments system. As a consequence, both public-sector and private markets have given great attention to attempting to identify and control risk exposures. ; The author of this article observes that one of the more interesting developments in this evolution has been the push, for several reasons, toward real-time gross settlement systems with collateralization. Systems, instruments, and markets are evolving at a fast pace that is putting pressure on the political entities to bring their various rules and regulations into harmony, and such harmonizing requires extensive international coordination and cooperation. In addition, central banks realize that they still may be thrust into the role of the lender of last resort should the difficulties threaten to bring down settlement and clearing systems.

Suggested Citation

  • Robert A. Eisenbeis, 1997. "International settlements: a new source of systemic risk?," Economic Review, Federal Reserve Bank of Atlanta, vol. 82(Q 2), pages 44-50.
    • Handle: RePEc:fip:fedaer:y:1997:i:q2:p:44-50:n:v.82no.2
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    References listed on IDEAS

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    1. Jie Hu, 1994. "Information ambiguity: recognizing its role in financial markets," Economic Review, Federal Reserve Bank of Atlanta, vol. 79(Jul), pages 11-21.
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    Cited by:

    1. Wall, Larry D. & Eisenbeis, Robert A. & Frame, W. Scott, 2005. "Resolving large financial intermediaries: Banks versus housing enterprises," Journal of Financial Stability, Elsevier, vol. 1(3), pages 386-425, April.
    2. Robert E. Litan, 1997. "Institutions and policies for maintaining financial stability," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 257-297.
    3. Singleton,John, 2010. "Central Banking in the Twentieth Century," Cambridge Books, Cambridge University Press, number 9780521899093.
    4. Aleksandra Bradic Martinovic, 2011. "Systemic Risks Control Aa a Determinant of Payment Systens Development in WB Countries," Book Chapters, in: Stefan Bogdan Salej & Dejan Eric & Srdjan Redzepagic & Ivan Stosic (ed.), Contemporary Issues in the Integration Processes of Western Balkan Countries in the European Union, chapter 26, pages 424-442, Institute of Economic Sciences.
    5. Mark Flannery, 1999. "Modernizing Financial Regulation: The Relation Between Interbank Transactions and Supervisory Reform," Journal of Financial Services Research, Springer;Western Finance Association, vol. 16(2), pages 101-116, December.
    6. Rungporn Roengpitya & Phurichai Rungcharoenkitkul, 2010. "Measuring Systemic Risk And Financial Linkages In The Thai Banking System," Working Papers 2010-02, Monetary Policy Group, Bank of Thailand.
    7. Yunyong Thaicharoen & Rungporn Roengpitya & Jiranit Chaowalit & Songklod Rastapana, 2009. "Developing the Efficient and Resilient Financial System for Thailand: Lessons from the Crisis and Challenges Ahead," Working Papers 2009-04, Monetary Policy Group, Bank of Thailand.

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