Table of Contents

Research Handbook on Crisis Management in the Banking Sector

Research Handbook on Crisis Management in the Banking Sector

Research Handbooks in Financial Law series

Edited by Matthias Haentjens and Bob Wessels

In this timely Handbook, over 30 prominent academics, practitioners and regulators from across the globe provide in-depth insights into an area of law that the recent global financial crisis has placed in the spotlight: bank insolvency law.

Chapter 14: Set-off, netting and close-out netting

Francisco Garcimartín and Maria Isabel Saez

Subjects: economics and finance, financial economics and regulation, money and banking, law - academic, company and insolvency law, finance and banking law


Set-off, netting and close-out netting are transactional tools designed to reduce certain financial risk, in particular counterparty risk and market risk. They are, therefore, commonly used by banks and other financial (and even non-financial) institutions. The purpose of this chapter is to offer the reader an introduction to the concepts of set-off, netting and close-out netting (infra 14.2.1), point out their economic function (infra 14.2.2) and describe some of the key issues raised by the legal framework applicable to those risk management tools (infra 14.3).

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