One of the driving forces behind this interdependence is the prevalence of free trade agreements (FTAs) in East Asia. FTAs expand trade and direct investment by eliminating trade barriers among the parties to such agreements. Although recognizing such merits, we should bear in mind the exclusiveness of FTAs to parties outside the agreements.
For further background, see footnote 3. 9. Non-default losses are losses deriving from operational risk, investment and custody risk, and general business risk. 10. In the hypothetical extreme stress scenarios considered by the Committee on Payments and Market Infrastructures (CPMI), the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO), all CCP service lines were able to absorb default losses.