The Prudential Regulation and Management of Foreign Exchange Risk
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Summary:
This paper examines issues in the prudential management and regulation of foreign exchange risk. It begins with measurement issues, notably converting foreign currency items into domestic currency terms, and calculating foreign exchange positions. The focus then shifts to managing foreign exchange risks. Although the key to effective management lies in the bank’s reporting and internal control systems, regulators frequently seek to limit such risks directly. This usually involves limiting the overall open position in terms of bank capital or requiring that capital be set aside against such risks.
Series:
Working Paper No. 1998/037
Subject:
Banking Currencies Exchange rate risk Exchange rates Financial regulation and supervision Foreign currency exposure Foreign exchange Money
English
Publication Date:
March 1, 1998
ISBN/ISSN:
9781451845549/1018-5941
Stock No:
WPIEA0371998
Pages:
33
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