Market, Credit, Counterparty and Settlement Risks

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Market, Credit, Counterparty and Settlement Risks - Article

Treasury transactions create different but interconnected risks. **Market risk** arises from adverse price movements, **credit risk** from deterioration or default of an issuer or borrower, **counterparty risk** from failure of a trading counterparty, and **settlement risk** when agreed cash, securities, or currencies are not exchanged as expected. This article explains their differences, interaction, controls, and practical CAIIB applications.

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