Topic: systemic risk

17 Nov 2010

Marking-to-market banks by Dr Alex Pilato

When only part of a balance sheet is marked-to-market and the other is not, not only an entity (bank or corporate or pension fund) will have two fundamentally different and incompatible risk measures, but it will also create a gigantic liquidity exposure. Any market disturbance could result in financial failure even though the entity could read more »