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C
Cross Guarantee Contract
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A proposed comprehensive insurance or guarantee mechanism under which financial institutions would pay and receive premiums to obtain and provide guarantees of each other's depository and counterparty obligations. These private guarantees would be market priced. Parties would exchange currently non-public information to assure an efficient market, and these contracts would replace existing deposit insurance. Existing credit ratings would be an initial input to the pricing process, but the market price for an institution's 'insurance' would soon become the dominant measure of its soundness.
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Glossary *
C
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