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Sharing the Risk of Settlement Failure: Synopsis


  • Fujiki, Hiroshi
  • Green, Edward J.
  • Yamazaki, Akira


Two 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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  • Fujiki, Hiroshi & Green, Edward J. & Yamazaki, Akira, 1998. "Sharing the Risk of Settlement Failure: Synopsis," Discussion Papers 1998-07, Graduate School of Economics, Hitotsubashi University.
  • Handle: RePEc:hit:econdp:1998-07

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    References listed on IDEAS

    1. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, July.
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    Cited by:

    1. 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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