The Basel Committee on Banking Supervision and the Committee on Payment and Settlement Systems are working jointly to revise the committee’s Supervisory guidance for managing settlement risk in foreign exchange transactions. An update to a 1996 report, published in 2008, found that via mechanisms, such as CLS Bank, the financial services industry reduced FX settlement risk. The report recommended that individual institutions ensure that the risk controls and incentives they have in place favour the use of risk-reducing FX settlement methods. It also suggested that individual institutions, industry groups and central banks should take further measures to decrease the risk.
Click here for the release from Bank For International Settlements.