Contingency

1. Financial reporting - business planning.

Broadly, any uncertain future event.

2. Financial reporting - IAS 37.

For financial reporting purposes, IAS 37 defines a contingent liability by reference to the occurrence - or non-occurrence - of uncertain events not wholly within the control of the entity.

IAS 37 defines a contingent asset in a similar way.

3. Business planning.

An uncertain future event.

Usually - but not always - one that is expected to have a negative impact if it were to occur.

4. Financial management.

An amount of money set aside to deal with the potential negative impact of an uncertain future event.

4. Financial management.

An amount of money set aside to deal with the potential negative impact of an uncertain future event.

5. Cash management - treasury - tokenisation - central bank digital currency (CBDC) - distributed ledger - platforms - programmability.

In the context of programmability, contingency is the ability to write and input code that enables the performance of actions, contingent on other actions having been completed, or other important conditions being present.

Benefits of programmability & contingency

"Tokenisation – the process of recording claims on financial or real assets that exist on a traditional ledger on a programmable platform – introduces two important capabilities.

First, by dispensing with messaging and the reliance on account managers to update records, it provides greater scope for composability, whereby several actions are bundled into one executable package.

Second, it enables the contingent performance of actions through smart contracts, ie logical statements such as “if, then, or else”.

By combining composability and contingency, tokenisation makes the conditional performance of actions more readily attainable, even quite complex ones...

Moreover, programmability allows new types of contingent payment, while certain policy measures (eg capital controls) can be built in from the start."

Bank for International Settlements (BIS) Annual Economic Report 2023, pages 89 & 91.

See also

• Bank for International Settlements (BIS)
• Business contingency management
• Business continuity plan
• Cash management
• Central bank digital currency (CBDC)
• Code
• Composability
• Contingency plan
• Contingent
• Contingent assets
• Contingent capital
• Contingent convertible capital
• Contingent covenant
• Contingent item
• Contingent liabilities
• Contingent risk
• Contingent Term Repo Facility (CTRF)
• Deal contingent forward
• Distributed ledger
• Financial reporting
• IAS 37
• Payment
• Platform
• Reserves
• Tokenise

Other resource

• Bank for International Settlements (BIS) Annual Economic Report 2023