In these circumstances, allocating losses on an ad hoc basis could exacerbate credit and liquidity strains for clearing participants, which are often located across several jurisdictions. The ECB therefore supports the European Commission’s proposal to enhance EU-level CCP supervision.
Foremost is the adverse impact on remittance costs and flows of the closure of accounts of several money transfer operators (MTOs) by correspondent banks who are limiting their exposure to possible channels for money laundering and other financial crimes. This is a derisking strategy largely driven by business decisions of foreign banks, weighing the risks and benefits of dealing with remittance companies.