(9/29/16)

Clients
Interest Rates Swaps

Interest Rate Swaps

Bank
Interest Rates Swaps

Interest Rate Swaps

Curve Global (Clearing Bank)

Bank IRS
Client IRS

Client IRS
Bank IRS
30 million

Remember:every asset isa liability for another actor.

Remove Risk Exposure. City ofLondon very concenred about Brexit.
Debt settled in Central Bank money.
No money changes hands.Only promises to pay in the furure.
Only future payments.
Liquidity risk is sort of a public good. The liquidity risk is managed by the Centrla Bank. Liquidity
Risk is concentrated on the Clearing Bank.
All liquidity risk is concentrated in Curve Global.
Interbank Market:
Fed funds market no longer major interbank market.
Global Money Notes #6: Basel III.
Fed Funds Rate 0 0.25 then 0.25 0.5.
Fed Funds not relevant anymore.