Learning Curve

Credit Derivatives in various forms have been used by the interbank market for a number of years.

The simple business of lending to a corporate institution and sitting on the credit risk is not profitable these days.

In last week's issue of DW we looked at the treatment of credit risk mitigation in the recently released consultation paper by the European Commission on new capital adequacy rules for European Union financial institutions.

In last week's issue of DW we looked at the treatment of credit risk in the recently released consultation paper by the European Commission on new capital adequacy rules for European Union financial institutions, and compared it to similar proposals by the Basel Committee on Banking Supervision.

At the end of last month the European Commission published a consultation paper proposing new capital adequacy rules for European Union banks and securities houses.

Weather derivatives markets have traditionally been characterized as having a small number of participants and large bid-ask spreads, but this is rapidly changing.

The list of actual contracts in use is extensive and constantly evolving.

Since the summer of 1997, when the first weather derivatives transaction was recorded, we have witnessed the development of a new derivatives market in the United States, which is gradually expanding across the globe.

Does Value at Risk (VAR) measure risk?

Energy markets around the world are rapidly being deregulated, exposing participants to potentially enormous risks. In response to this there has been an explosion in the use of derivatives for managing these risks.

The Black-Scholes model is well known to suffer from various imperfections.

Recently the French government issued a 30-year OATi, an inflation-linked bond (ILB), boosting this nascent French debt sector.