Credit Conversion Factor and European Monetary System: Difference between pages

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''Bank supervision - capital adequacy''
(EMS).


(CCF).
The predecessor in the European Union of Economic and Monetary Union (EMU), which led in turn to the establishment of the euro.  


The CCF converts an off balance sheet exposure to its credit exposure (Risk Weighted Assets) equivalent.


Off balance sheet exposures - like a guarantee - have a probability of becoming a credit exposure and shifting onto the balance sheet, for example if the guarantee is called.  
The EMS was designed to create an area of currency stability throughout the European Community by encouraging its member states to co-ordinate their monetary policies.  


The EMS used the Exchange Rate Mechanism (ERM) with the aim of stabilising exchange rates and thereby facilitating trade between member states.


The CCF is an estimate of this probability.


By multiplying the CCF with the value of the guarantee or other off balance sheet exposure, you get the expected value of the credit exposure.
== See also ==
 
* [[European currency unit]]
 
* [[European Economic and Monetary Union]]
==See also==
* [[Exchange Rate Mechanism]]
*[[Capital adequacy]]
* [[Parity grid]]
* [[Credit]]
*[[Guarantee]]
*[[Off balance sheet risk]]
*[[Risk Weighted Assets]]
 
[[Category:Compliance_and_audit]]
[[Category:Financial_risk_management]]

Revision as of 13:03, 5 May 2016

(EMS).

The predecessor in the European Union of Economic and Monetary Union (EMU), which led in turn to the establishment of the euro.


The EMS was designed to create an area of currency stability throughout the European Community by encouraging its member states to co-ordinate their monetary policies.

The EMS used the Exchange Rate Mechanism (ERM) with the aim of stabilising exchange rates and thereby facilitating trade between member states.


See also

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