Fifty years later, 'Herstatt' risk is synonymous with foreign exchange settlement risk, highlighting the systemic vulnerabilities that still exist within the global financial infrastructure.
The Basel Committee has emerged as a powerful forum for global bank supervision, establishing regulatory capital standards that aim to ensure sufficient capitalization based on risk.
Despite advancements in finance, Herstatt risk persists in global foreign exchange and derivatives markets, where settlement processes struggle to keep pace with market volatility.
Breakthroughs in technology, particularly blockchain, have the potential to significantly reduce currency settlement latency, transforming the way transactions are processed in real-time.
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