In 1974, the bankruptcy of Bankhaus Herstatt, a German bank active in FX markets, demonstrated how FX settlement risk can undermine financial stability. At 15:30 CET on June 26, 1974, the German authorities closed the bank down. While Herstatt had already received Deutsche marks from its counterparties, it had not yet made the corresponding US dollar payments in New York. Herstatt's failure to pay led banks to generally stop outgoing payments until they were sure their countervalues had been received. The international payment system then froze, and the erosion of trust caused lending rates to spike and credit to be curtailed. Settlement risk continues to be a significant risk and has increased in both relative and absolute terms since 2013 (Bech & Holden, 2019).