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.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
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 (electric blue) over time vs the market's (Polymarket, amber), 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. Loading the probability audit trail…
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.