Sanctions and Interest rate risk: Difference between pages

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1. ''International trade.''
(IRR).


In the context of international trade, economic sanctions are government regulations which prohibit trade with specified countries or prohibit the trading of particular goods (usually military in nature) with specified countries.
The risk associated with a change in interest rates.  




2. ''International relations.''
This may take several forms in the treasury context.


Sanctions may also impose tariffs, other economic disadvantages or sporting or cultural restrictions on a specified country, with the aim of exerting political pressure on its government.
For example, and depending on the direction of the change:
*Increasing interest cost
*Falling interest income
*Changing market value of debt, or of pension liabilities
*Differences in competitiveness
*The changing nature of a market when interest rates change
*Secondary effects, especially potentially adverse effects, resulting from any of the primary effects above. For example, potential breaches of interest cover covenants.




3.  ''Law - international law.''
Sometimes written 'interest-rate risk'.


More broadly, a sanction can be any legally imposed penalty, punishment, or the threat of one.
Not to be confused with Internal Rate of Return, which is also abbreviated to ''IRR''.




== See also ==
== See also ==
* [[Blocking Regulation]]
* [[Asset-liability management]]
* [[Boycott]]
* [[Cross-currency interest rate swap]]
* [[International law]]
* [[Double-whammy]]
* [[International trade]]
* [[Duration]]
* [[Law]]
* [[Exposure]]
* [[OFAC]]
* [[Fair value interest rate risk]]
* [[OFSI]]
* [[Financial covenant]]
* [[Quota]]
* [[Forward rate agreement]]
* [[Sanction]]
* [[Guide to risk management]]
* [[Sanctions screening]]
* [[Internal rate of return]]
* [[Tariff]]
* [[Interest cover]]
* [[Interest rate]]
* [[Interest rate cap]]
* [[Interest rate collar]]
* [[Interest rate exposure]]
* [[Interest rate floor]]
* [[Interest rate futures]]
* [[Interest rate gap]]
* [[Interest rate guarantee]]
* [[Interest rate option]]
* [[Interest Rate Risk in the Banking Book]]  (IRRBB)
* [[Interest rate shock]]
* [[Interest rate swap]]
* [[IRHP]]
* [[Matching]]
* [[Pipeline risk]]
* [[Portfolio hedging]]
* [[Risk-free rate of return]]
* [[Risk-free rates]]
* [[Shock]]
* [[Time bins]]
* [[Treasury]]


[[Category:Accounting,_tax_and_regulation]]
 
== Other resource ==
 
[[Media:2015_05_May_-_The_devil_is_in_the_detail.pdf| The devil is in the detail, The Treasurer, 2015]]
 
[[Category:Manage_risks]]

Latest revision as of 06:49, 19 March 2024

(IRR).

The risk associated with a change in interest rates.


This may take several forms in the treasury context.

For example, and depending on the direction of the change:

  • Increasing interest cost
  • Falling interest income
  • Changing market value of debt, or of pension liabilities
  • Differences in competitiveness
  • The changing nature of a market when interest rates change
  • Secondary effects, especially potentially adverse effects, resulting from any of the primary effects above. For example, potential breaches of interest cover covenants.


Sometimes written 'interest-rate risk'.

Not to be confused with Internal Rate of Return, which is also abbreviated to IRR.


See also


Other resource

The devil is in the detail, The Treasurer, 2015

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