Interbank funds transfer systems are arrangements through which transfers of funds are carried out. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Obtain an original essay between banks on their own behalf or on behalf of their clients. Interbank settlement terms are much more uniform. Private banks generally settle their obligations among themselves regarding accounts with public central banks. Claims on these public central banks are no longer backed by commodities and generally have a form of legal tender; they are the most reliable form of money in the economy. High-value money transfer systems (LVTS) are generally distinguished from retail money transfer systems that process a large volume of relatively small value payments. The average size of transfers through high value remittance systems is substantial and transfers are generally more time critical as financial markets operate there. The first of these is the transfer of information between the payer's and payee's banks. The second key element is settlement – ​​that is, the actual transfer of funds between the payer's bank and the payee's bank. Although the interbank settlement process has evolved over time, there are few risks inherent in the system. According to our observation, the system has two types of risks and they mainly revolve around the settlement element. Credit Risk: It is associated with counterparty default, i.e. the risk that a counterparty will default on an obligation for full value, whether when due or at any time thereafter. It is permanent in nature.Liquidity risk: This is the risk that a counterparty does not settle an obligation at its full value at maturity, but at an unspecified time thereafter. This can be short term or long term. In addition, there are specific cases that lead to the risks highlighted above: the transmission of payment information and the settlement of the payment do not take place simultaneously. Settlement delays may also result in liquidity risk. A bank may not be sure of the funds it will receive through the payment system until settlement is complete, and it may therefore not be sure whether its liquidity is adequate or not. Asynchronous settlement: time lag between the completion of the two parts of the payment system. transaction (i.e. any time lag between the payment stage and the delivery stage). It is the largest source of primary risk in the settlement of foreign exchange and securities transactions, or, more generally, in the exchange of value systems. These credit and liquidity risks arise between two banks, but this further leads to greater risk and impacts all other banks in the ecosystem and is called systematic risk. Central banks are particularly concerned about systemic risk. This is the risk that failure by one participant to meet its obligations when due may result in other participants failing to meet their obligations when due. Such a failure could trigger broader financial difficulties that could, in extreme cases, threaten the stability of payment systems and even the real economy. Keep in mind: this is just a sample. Get a personalized article from our expert writers now. Get a Personalized EssayBy By their very nature, interbank payment and settlement networks, systems and systems potentially constitute a key institutional channel for..