What Is Settlement Risk in FX

question 133

Multiple Choice

What is settlement risk in FX?

• A) The risk of failure of a payments or settlement sy
• B) The risk that only one side of an exchange of curr
• C) The risk of payments gridlock in a real-time gross
• D) The risk that default by a counterparty before the

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Definitions:

Bretton Woods Agreement

A 1944 agreement that established a new international monetary system, creating institutions like the International Monetary Fund (IMF) and the World Bank to ensure financial stability and promote economic cooperation.

Gold Standard

An economic setup where the worth of paper money or a country's currency is directly connected to the value of gold.

Fixed Exchange Rates

A government or central bank policy to maintain the country’s currency at a constant value relative to another currency or a benchmark.

Floating Exchange Rates

A currency valuation system where the value of a currency is determined by the foreign exchange market based on supply and demand relative to other currencies.