Abstract

Distributed financial systems are usually designed around individual operations.

A payment succeeds or fails. A deposit settles or reverses. A withdrawal is confirmed. A guarantee covers a loss. A reserve absorbs an exposure.

Real systemic failures rarely respect those boundaries.

Multiple transactions may depend on the same settlement provider, correspondent bank, custodian, blockchain bridge, stablecoin issuer, jurisdiction, liquidity facility, or operational control plane. A single upstream disruption can therefore invalidate thousands of apparently independent operations at once.

The resulting problem is not merely correlated transaction failure.

It is economic contagion.

A reversal can create obligations. Those obligations consume guarantees. Guarantees consume reserves. Reserve depletion changes availability policy. Reduced availability creates liquidity pressure. Liquidity pressure may force asset sales or delay settlement.…