Abstract
In order for a market to exist, there must be a mechanism to convey whatever is traded conveniently and safely between parties to the trades. Moreover, the scope of the market can only be as large as the community of traders who have access to such means of transfer. In particular, in a large market, traders who do not know one another must deliver assets and money in order to complete their trades. Each trader will only be willing to do so if he is confident that the reciprocal payment or asset transfer due to him will also be made. Such trust in the integrity of the market must be supported by formal, institutionalised safeguards.
The views expressed in this article are solely those of the author, and do not necessarily represent the views of the Federal Reserve Bank of Chicago or of the Federal Reserve System. The author is a lay person in the law. Where some discussion of legal issues in general terms has been necessary in the article, it should not be regarded as an authoritative statement of law. The author has benefited from discussions with Sujit Chakravorty, Robert Eisenbeis, John McPartland, Anders Revemann, William Roberds, Robert Steigerwald, and Staffan Viotti, and from the discussion provided by Richard Lindsey at the 2000 Financial Markets Conference of the Federal Reserve Bank of Atlanta. This article will appear in the proceedings of that conference, to be published in the Federal Reserve Bank of Atlanta Economic Review. It is reproduced in this volume through the courtesy of the Federal Reserve Bank of Atlanta, which places the article in the public domain.
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Green, E.J. (2001). Clearing and Settling Financial Transactions, Circa 2000. In: Santomero, A.M., Viotti, S., Vredin, A. (eds) Challenges for Central Banking. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-3306-8_7
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DOI: https://doi.org/10.1007/978-1-4757-3306-8_7
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