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When financial institutions fail, counterpary risk causes a domino effect throughout the system - as you say.
It seems to be reminiscent of 2006/2007 that councils - such as Kent County Council - pension funds are investing in riskier funds . Reminds me of the Iceland banks being used at the time to obtain a better return and that did not work out well.
Thank you for your posts.
RE: Counterparty Risk Will Dwarf Market Risk in Next Financial Crisis.