Systemic risk

1. Market supervision and regulation.

The risk that the failure of one participant in a transfer system, or in financial markets generally, to meet its required obligations will cause other participants or financial institutions to be unable to meet their obligations (including settlement obligations in a transfer system) when due.

Such a failure may cause significant liquidity or credit problems and, as a result, might threaten the stability both of financial markets and of the wider economy.

These secondary adverse consequences are sometimes known as a 'domino effect' or 'contagion'.

2.

By extension, and more loosely, all risks accepted by participating in a given market, including the risk of contagion.

See also

• Contagion
• Conduct risk
• European Systemic Risk Board
• Financial Policy Committee
• Financial stability
• Gridlock
• Macroprudential
• Systematic risk
• Systemically Important Bank
• Systemically Important Financial Institution
• Systemically Important Payment System (SIPS)
• Systemic Risk Buffer
• Transfer system
• Unwinding