Forex settlement risk: banks look beyond CLS
Foreign exchange settlement risk - the risk of a bank in an FX transaction paying the currency it sold without receiving the currency it bought - is one of the biggest concerns in today's international banking community. As the FX market continues its trend of exponential growth year on year, and average daily trade volumes exceed $3 trillion, it is not surprising that forex settlement risk has dominated the G-10 governors' agenda for more than 10 years.
FX settlement failures can arise for a
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