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Addressing the “De-Risking” Challenge

This note proposes a broad strategy for addressing one of the most significant recent failings of the international financial system, namely, the reluctance of large international banks to maintain correspondent accounts with banks in numerous emerging market countries.  This phenomenon, known as “de-risking”, can effectively sever some countries’ linkages to the global financial system.  The result can damage a country’s ability to make trade-related and other payments, and can also place considerable strain on remittance flows, often a vital underpinning of emerging market economies.  Another negative consequence of de-risking is its detrimental impact on financial inclusion, as respondent banks in emerging market countries have fewer resources to allocate to underserved local regions and populations.

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Financial Services Volunteer Corps: Katie Thompson, 212-771-1410
Addressing the "De-Risking" Challenge
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