The Bank of Finland has long traditions in payment and settlement system simulations : the 18th Simulator Seminar
Korpinen, Kasperi (03.09.2020)
JulkaisusarjaBank of Finland Bulletin. Blog
JulkaisijaBank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-202009032312
I had barely joined the Bank of Finland simulator team and was analyzing the potential changes on liquidity needs of merging the Finnish equity and bond settlement systems, when the 2008 financial crisis hit. As an immediate reaction, we were asked by our management to analyze the liquidity and credit risks associated with possible failures of foreign brokerage firms active in the Finnish market. Using our simulator, we ran stress tests for the Finnish securities settlement system and found out that, luckily, the liquidity needs were relatively low, partly due to the high reciprocity of the trades and associated cash flows. Even though the Bank of Finland simulator was originally created for payment system analysis, this is a good example of versatile use cases of the simulation tool.