Capitalism thrives on competition. But eventually somebody wins the game, ending competition. This is why governments are needed-to play referee, keeping everybody honest by making sure everybody gets a chance to play.

But this is not always so. Consider the markets for settlement of large payments-that is, presently, foreign exchange. There's plenty to be said for having a central mechanism for settling the $600 trillion in annual currency exchanges. As things stand, the risk of a house-of-cards cascade of transaction defaults, called Herstadtt Risk, is more dangerous to global business than the risk of business concentration implicit in the formation of the Continuous Linked Settlements Bank (CLS), a centralized clearing house now being formed.

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