CLS: providing a solution or creating more headaches?

Under the CLS system, member banks have to hold multicurrency accounts at the CLS Bank, which will settle trades by debiting the account of the seller for the currency and crediting that of the buyer. Settlement members will be allowed a "short position limit" in each currency and an "aggregate short position limit" across currencies. Both sides of each trade will settle simultaneously within each bank's "aggregate short position limit" to achieve a form of payment versus payment (PvP). Though settlement risk is reduced in this way, intra-day liquidity risk can be heightened by CLS, says the banker, who is working closely on the project.