Bilateral netting

{{Short description|Legally enforceable arrangement}}

{{other uses|Bilateral (disambiguation)}}

Bilateral netting in finance and investments is a legally enforceable arrangement between a bank and a counterparty that creates a single legal obligation covering all included individual contracts. This means that a bank’s obligation, in the event of the default or insolvency of one of the parties, would be the net sum of all positive and negative fair values of contracts included in the bilateral netting arrangement.{{cite book |url=https://books.google.com/books?id=8JEZRJSgQhkC&pg=PA134 |page=134 |title=International Capital Markets; Developments, Prospects, and Key Policy Issues |year=1996

|author1=Takatoshi Itō |author2=David Fokke Ihno Folkerts-Landau |author3=Marcel Cassard |publisher=International Monetary Fund|isbn=9781557756091 }}{{cite book |url=https://books.google.com/books?id=F5KDO4Xwd68C&pg=PA72 |pages=72–106 |title=Current Legal Issues Affecting Central Banks, Volume V

|author=International Monetary Fund |year=1992 |publisher=International Monetary Fund |isbn=9781557756954 |editor=Robert C. Effros}}{{cite book |url=https://books.google.com/books?id=3nMoLmqssB0C&pg=PA46 |page=46 |title=Payments, Clearance, and Settlement; A Guide to the Systems, Risks, and Issues |author1=Nolani T. Traylor |author2=Tamara E. Cross |author3=Nancy Eibeck Robert Pollard |author4=Tamara E. Cross |author5=Nancy Eibeck, Robert Pollard |year=1997 |publisher=United States General Accounting Office |isbn=9780788148422}}{{cite book |url=https://books.google.com/books?id=QJIvCgAAQBAJ&pg=PA345 |page=345 |title=Handbook of Fixed-Income Securities |year=2016 |isbn=9781118709191 |publisher=Wiley |editor=Pietro Veronesi}}