Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
By stepping between bilateral counterparties, central counterparties (CCPs) transform credit exposure, thereby improving financial stability. But large CCPs are concentrated and interconnected with major global banks. Moreover, although they mitigate credit risk, CCPs create liquidity risks, because they require participants to provide cash. Such requirements increase with market volatility; consequently, CCP liquidity needs are inherently procyclical. This procyclicality makes it more challenging to assess CCPs’ resilience in the rare event that one or more large financial institutions default. Liquidityfocused macroprudential stress tests could help to assess and manage this systemic liquidity risk.