In foreign exchange markets, transacting across different time zones creates Herstatt Risk—the threat that one party pays their currency leg but the counterparty defaults before delivering the opposing currency due to time zone differences. To eliminate this risk, central banks support the Continuous Linked Settlement (CLS) network. [1]

[CLS Processing Portal] ---> Verifies both currency legs match ---> Simutaneous PvP Settlement Released

The CLS network operates a specialized Payment-versus-Payment (PvP) settlement engine. The system connects to central bank RTGS networks globally. It ensures that a currency transfer is executed if and only if the opposing currency leg is transferred simultaneously, eliminating settlement risk across global foreign exchange markets.