The risk that a trading counterparty, possibly a bank, may fail to fulfil its part of an exchange (currency, swap, or other instrument) after the first party has already fulfilled its part of the contract. The name "Herstatt Risk" has been in common use since 1974 when Bankhaus Herstatt defaulted on a number of currency transactions.
See: Reuter's Financial Glossary.
Inquiries should be directed to:
Mark Dixon,
mdixon@ecel.uwa.edu.au,
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