PHOTO: RICHARD DREW/AP Another brutal week on Wall Street has brought risks into sharper focus.
The pillars of the global financial system are fundamentally unstable and could lead to a frightening chain reaction in the next crisis, the world’s top watchdog has warned.
Giant central counterparties (CCPs) that clear much of the US$540 trillion (NZ$794 trillion) nexus of derivatives are themselves vulnerable to failure in times of extreme stress.
This is a worry looming ever larger as rising US interest rates expose the weak links in global debt markets.
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