Counterparty Risk
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Revision as of 14:46, 16 November 2018 by wiki_crypto>Zeb.dyor (Created page with "Credit or counterparty risk is the risk that a borrower will default on their debt. If that occurs, the lender would like recourse to the borrower to recover that debt. The si...")
Credit or counterparty risk is the risk that a borrower will default on their debt. If that occurs, the lender would like recourse to the borrower to recover that debt. The simplest way to do this is by using collateral. Collateralization is a fundamental tool used throughout the traditional finance space to minimize or mitigate credit risk. Collateralization occurs when a borrower pledges an asset as recourse to the lender in the event of default on that loan.
