What's the Potential Impact of Force Majeure Claims on Financial Stability

Abstract: This article examines the potential aggregate impact on financial stability of several bilateral force majeure claims filed at approximately the same time in one or more markets. One and a half years after the pandemic started, I take stock of the developments involving force majeure claims thus far, and conclude that the likelihood of these claims creating a systemic threat to financial stability is low.

Keywords: Force Majeure; Mortgage-Backed Securities; Derivative Contracts; Covid-19;

JEL Classification: B26; G21;

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Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Chicago Fed Letter

Publication Date: 2021-09-01

Issue: 459

Pages: 7