Ask any central banker what is his worst nightmare and he's likely to say one word: Herstatt. Herstatt means gridlock in the world's financial system as hundreds of banks, which yesterday trusted each other to make payments, no longer do. What can shatter that trust? A technical snarl-up, a political shock, or worst of all, the sudden failure of a major bank. By David Shirreff
September 01, 1998