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asambeis [7]
3 years ago
6

The risk that a central bank will not make the necessary transfer of foreign currency to complete a currency settlement is known

as ________ risk. Group of answer choices settlement exchange rate Interest-rate Herstatt
Business
1 answer:
motikmotik3 years ago
4 0

Answer:

Herstatt.

Explanation:

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

Herstatt risk is also known as cross-settlement risk or settlement risk. It was named after Bankaus Herstatt (a German bank) that failed in June 1974 when it was supposed to settle a contract for a payment received from the other party and consequently, amounting to a loss of about $602,000,000.

Hence, is mainly a loss in foreign exchange transactions where a party defaults after receiving money from another.

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