Working Papers present research work by both Danmarks Nationalbank’s employees and our partners. Working Papers are primarily targeted at professionals and people with an interest in central banking research as well as economics and finance in a broader sense.

Financial stability and financial risks

Systemic Risk in the Danish Interbank Netting System

Central banks have become increasingly worried about systemic risks to the financial market and infrastructure stemming from payment systems. Failure to settle by a participant in a netting system can potentially jeopardize the settlement of other participants. The fear of a systemic crisis has been one of the primary motivations for the introduction of Real Time Gross Settlement systems around the world. This paper provides an assessment of the systemic risk inherent in the Danish interbank netting system. In accordance with similar empirical studies conducted in other European countries, the risk is found to be low.