Sharing the Risk of Settlement Failure: Synopsis
AbstractTwo policies toward payments-system risk are common, but superficially appear to be contradictory. One policy is to restrict the exposure to risk generated by one participant to other participants who are, by one measure or another, directly concerned with the risky participant. The other policy is to provide a "safety net," typically provided by government and funded by taxes collected from all participants and even from non-participants, to share losses due to "systemic risk." In this paper, we provide a model in which both of these policies can be constituents of an economically efficient regime of payments-risk management.
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Bibliographic InfoPaper provided by Graduate School of Economics, Hitotsubashi University in its series Discussion Papers with number 1998-07.
Length: 14 p.
Date of creation: Oct 1998
Date of revision:
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- Yamazaki, Akira, 1998. "Risk Sharing in a Network of Transactions: A Public Information Case," Discussion Papers 1998-04, Graduate School of Economics, Hitotsubashi University.
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