Central clearing and systemic liquidity risk

Arbeitspapier

By stepping between bilateral counterparties, a central counterparty (CCP) transforms credit exposure. CCPs generally improve financial stability. Nevertheless, large CCPs are by nature concentrated and interconnected with major global banks. Moreover, although they mitigate credit risk, CCPs create liquidity risks, because they rely on participants to provide cash. Such requirements increase with both market volatility and default; consequently, CCP liquidity needs are inherently procyclical. This procyclicality makes it more challenging to assess CCP resilience in the rare event that one or more large financial institutions default. Liquidity-focused macroprudential stress tests could help to assess and manage this systemic liquidity risk.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Working Paper ; No. 2019-12

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation ; Central Banks and Their Policies ; Economic History: Financial Markets and Institutions: U.S.; Canada: 1913-
• Thema: Financial systems ; Central counterparties ; CCPs ; margin ; liquidity risk ; systemicrisk ; financial stability ; procyclicality

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): King, Thomas ; Nesmith, Travis D. ; Paulson, Anna Louise ; Prono, Todd
• Ereignis: Veröffentlichung
• (wer): Federal Reserve Bank of Chicago
• (wo): Chicago, IL
• (wann): 2019

Weitere Informationen

• DOI: doi:10.21033/wp-2019-12
• Handle: http://hdl.handle.net/10419/230378
• Letzte Aktualisierung: 10.06.6025, 12:45 MESZ