A practical guide to counterparty risk management and credit value adjustment from a leading credit practitioner Since the collapse of Lehman Brothers and the resultant realization of extensive counterparty risk across the global financial markets, the subject of counterparty risk has become an unavoidable issue for every financial institution. This book explains the emergence of counterparty risk and how financial institutions are developing capabilities for valuing it. It also covers portfolio management and hedging of credit value adjustment, debit value adjustment, and wrong-way counterparty risks. In addition, the book addresses the design and benefits of central clearing, a recent development in attempts to control the rapid growth of counterparty risk. This uniquely practical resource serves as an invaluable guide for market practitioners, policy makers, academics, and students.
It isn´t that Abby Carson can´t do her schoolwork. She just doesn´t like doing it. And in February a warning letter arrives at her home. Abby will have to repeat sixth gradeunless she meets some specific conditions, including taking on an extra-credit project to find a pen pal in a distant country. Seems simple enough. But when Abby´s first letter arrives at a small school in Afghanistan, the village elders agree that any letters going back to America must be written well. In English. And the only qualified student is a boy, Sadeed Bayat. Except in this village, it is not proper for a boy to correspond with a girl. So Sadeed´s younger sister will write the letters. Except she knows hardly any English. So Sadeed must write the letters. For his sister to sign. But what about the villagers who believe that girls should not be anywhere near a school? And what about those who believe that any contact with Americans is . . . unhealthy? Not so simple. But as letters flow back and forthbetween the prairies of Illinois and the mountains of central Asia, across cultural and religious divides, through the minefields of different lifestyles and traditionsa small group of children begin to speak and listen to one another. And in just a few short weeks, they make important discoveries about their communities, about their world, and most of all, about themselves.
Understanding Credit is the definitive guide to understanding what credit is, how it is reported, and how to make it work for you. This handbook reveals the strategies and techniques that professionals use to borrow credit effectively. It offers an uncomplicated view of credit in Canada, from explanations of the different forms of credit available to advice on how to determine the best option for each individual´s needs. Using credit does not mean getting into debt; when used wisely, it can enable anyone to realize their dreams as well as save and invest for the future. Tables and examples are included to illustrate how interest payments work and how the real cost of borrowing money differs between the different types of credit. Author Dave Ravindra also offers information explaining where to find the right lending institution and how to qualify for the credit needed. The provided list of resources covers everything from government legislation to Canada´s major banks. Sample letters are also included to use when requesting your credit report, and monthly budget sheets enable you to work out what you can afford to pay. Everything you need to understand credit is contained in this handy guide. Using the guidance offered here, you can build a solid credit report in as short a time as possible.
Banks are generally considered to be utilities that allow for the transmission of value on a daily basis in modern society, but they also seem to create devastating events like credit crises by the manufacture of credit. How this power originated in human society is of interest. Most animals produce some degree of savings, either in caching from one season to the next or for later in one season. Often these savings are an intergenerational transfer for the initial survival of young as in some wasps, or in a later use by the same individual who produces the savings either in the same year or the next as in many birds. The evolution of the bank, of institutions for organizing the savings of groups of humans has had a number of separate points of origin in history in various societies in antiquity and most recently during the Middle Ages in Europe. The history of banking illuminates the nature of contemporary fears about banks. Why banks are seen as necessary and deserving of saving or protecting during economic crises often seems a matter of faith or dogma than of necessity. This is why neither Bush nor Obama´s advisors, nor the EU have crafted as bold actions as FDR.
Since its inception, the market for credit derivatives has shown impressive growth and has hit a volume of more than $54 trillion in 2008. Credit derivatives are bilateral financial contracts that seek to transfer defined credit risks in a credit product or bunch of credit products to a counterparty. They have fundamentally changed the way banks price, manage, transact, originate, distribute and account for credit risk; they are being used for risk management and hedging as well as for speculation, balance-sheet management and regulatory capital purposes. Long celebrated as a way for banks to diffuse their risks, credit derivatives have instead multiplied them as they encouraged banks and other financial firms to take on riskier loans than they should have and exposed a much wider array of financial firms to the risk of default. In this book, the author carefully explains the basics of credit risk and expands on the different types and applications of credit derivatives.
This publication analyzes policy measures taken to curb the private sector credit growth in the period 2003-2008. The work evaluates the excessiveness of the credit development in Central and Eastern Europe (CEE) with respect to macroeconomic fundamentals. Based on the results, menu of policy options to counter adverse effects of the credit boom is reviewed. The analysis is based on a survey performed on eleven central banks in the region. The findings reveal high intensity of policy interventions. Deriving from the country experiences, we argue that in order to eliminate adverse impacts, policy measures should include combination of monetary and macroprudential tools with special emphasis on domestic environment and role of foreign banks in the region.