What if an outage at CLS forces banks back to bilateral FX settlement, reviving Herstatt risk?
An outage at CLS, which settles the bulk of global FX, forces banks back to risky bilateral settlement, reviving Herstatt risk at systemic scale, the FX-plumbing failure the CPMI and FSB monitor.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (gold) over time vs the crowd's (Polymarket, blue), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a risk-off shock. An outage at CLS, which settles the bulk of global FX, forces banks back to risky bilateral settlement, reviving Herstatt risk at systemic scale, the FX-plumbing failure the CPMI and FSB monitor. The trigger decomposes into signed root‑shocks — Volatility (VIX) ▲ · Dollar/reserve confidence ▼ · Financial conditions ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +1.1% hist -0.44–+0.82% · other way -0.58% (n=12) |
| 2 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.9% hist -0.62–-0.33% · other way +0.06% (n=12) |
| 3 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▲ +0.8% hist -0.19–+1.67% · other way +0.37% (n=12) |
| 4 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -0.8% hist -14.1–+4.52% · other way -1.04% (n=11) |
| 5 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.7% hist -4.29–+2.18% · other way +4.87% (n=11) |
| 6 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.6% hist -0.68–-0.08% · other way +0.04% (n=12) |
| 7 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.6% model prior · unmeasured |
| 8 | Tech sector XLK 📈 chart | Equity | ▼ -0.6% hist -0.58–+0.27% · other way +0.09% (n=12) |
| 9 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▼ -0.4% hist -0.34–+0.22% · other way +0.89% (n=12) |
| 10 | High-yield credit HYG 📈 chart | Rate | ▼ -0.4% hist -0.66–+0.02% · other way -0.28% (n=12) |
| 11 | EUR/USD EURUSDon Hyperliquid 📈 chart | FX | ▲ +0.4% hist -0.61–+0.55% · other way -0.88% (n=12) |
| 12 | 30y Treasury yield DGS30 📈 chart | Rate | ▲ +3bp hist -8.73–+4.67% · other way +8.8% (n=12) |
| 13 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.3% hist -0.68–+1.52% · other way +2.75% (n=12) |
| 14 | USD/JPY USDJPYon Hyperliquid 📈 chart | FX | ▼ -0.3% hist -0.24–+0.2% · other way +1.11% (n=12) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 40 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| SOL SOL | SHORT | -12.6% · 5d -9.8% | 100% | 7 | 0.60 | ✓ matches cascade |
| AVGO AVGO | LONG | +4.2% · 5d -0.2% ↺ fades | 70% | 25 | 0.37 | ⚠ differs |
| JPM JPM | SHORT | -1.3% · 5d -1.7% | 63% | 39 | 0.23 | ✓ matches cascade |
| ETH ETH | SHORT | -3.9% · 5d -4.2% | 65% | 11 | 0.21 | ✓ matches cascade |
| High-yield credit HYG | SHORT | -0.4% · 5d -0.3% | 62% | 32 | 0.21 | ✓ matches cascade |
| KRW KRW | SHORT | -1.4% · 5d +0.3% ↺ fades | 60% | 34 | 0.18 | ⚠ differs |
| SMH SMH | LONG | +1.5% · 5d -0.3% ↺ fades | 60% | 35 | 0.16 | ⚠ differs |
| XLF XLF | SHORT | -1.2% · 5d -1.3% | 58% | 35 | 0.16 | ✓ matches cascade |
| Gold XAU | LONG | +1.1% · 5d +0.3% | 58% | 35 | 0.15 | ✓ matches cascade |
| 30y yield DGS30 | SHORT | -10bp · 5d -3bp | 58% | 40 | 0.15 | ⚠ differs |
| Volatility VIX | SHORT | -0.9% · 5d +5.5% ↺ fades | 57% | 36 | 0.12 | ⚠ differs |
| USDJPY USDJPY | LONG | +0.3% · 5d -0.1% ↺ fades | 57% | 35 | 0.12 | ⚠ differs |
| Bitcoin BTC | LONG | +2.1% · 5d -2.1% ↺ fades | 56% | 14 | 0.11 | · |
| INR INR | SHORT | -0.4% · 5d +0.0% ↺ fades | 55% | 34 | 0.10 | ⚠ differs |