In the United States, foreign exchange derivative transactions typically occur between
A.
A few large internationally active banks, where the risks become concentrated.
B.
All banks with international branches, where the risks become widely distributed based on trading exposures.
C.
Regional banks with international operations, where the risks depend on the specific derivative transactions.
D.
Thrifts and large commercial banks, where the risks become isolated.
The Answer Is:
A
This question includes an explanation.
Explanation:
In the United States, foreign exchange derivative transactions typically occur between a few large internationally active banks. These banks are major players in the foreign exchange markets and often act as intermediaries, providing liquidity and managing risks for themselves and their clients. The concentration of these transactions among a few large banks leads to a concentration of risks within these institutions.
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