Risk that a central bank will not make the necessary transfer of foreign currency to complete a currency settlement is known as ________ risk.

Question

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The Herstatt risk, also known as settlement risk, is the risk that a central bank will not make the necessary transfer of foreign currency to complete a currency settlement. This risk is named after the Herstatt Bank, which famously failed to settle its foreign exchange transactions in 1974, leading to losses for its counterparties.

Risk That a Central Bank Will Not Make the Necessary