Conclusion

Conclusion

We examined the systemic risk of a network of banks with and without a CCP.  After exploring four different situations that could occur to the banks involved in the system, it can be concluded that the CCP is not helpful with reducing systemic risk.  This is determined because in order for the CCP to be helpful, its initial value would need to be near one billion dollars. That result becomes more of a bail out rather than a clearing party. Ultimately, we suggest that a CCP should not be used for a real-world application.