FIRB and Foreign exchange forward contract: Difference between pages

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''Capital adequacy''.
A transaction which solely involves the exchange of two different currencies:


Foundation Internal Ratings Based.
#on a specific future date
#at a fixed foreign exchange rate which is pre-agreed at the outset of the contract.


A simpler Internal Ratings Based (IRB) approach to determining capital requirements for banks and other financial institutions.


The FIRB approach includes certain credit risk assessments made internally by the regulated institution, in combination with other standardised externally generated data.
Foreign exchange forward contracts are used - among other purposes - for hedging forward foreign exchange exposures.
For example known or likely future currency receivables and payables.
 
They are priced by adjusting the spot foreign exchange rate to reflect the interest rate differential between the two currencies involved for the forward period.
 
 
Also known as a Forward foreign exchange contract, or a Foreign exchange forward.




== See also ==
== See also ==
* [[AIRB]]
* [[CertFMM]]
* [[Capital adequacy]]
* [[Hedging]]
* [[EAD]]
* [[Non-deliverable forward]]
* [[IRB]]
* [[Synthetic]]
* [[LGD]]
 
* [[PD]]
[[Category:Manage_risks]]
* [[RWAs]]
* [[STA]]

Revision as of 14:37, 1 November 2014

A transaction which solely involves the exchange of two different currencies:

  1. on a specific future date
  2. at a fixed foreign exchange rate which is pre-agreed at the outset of the contract.


Foreign exchange forward contracts are used - among other purposes - for hedging forward foreign exchange exposures. For example known or likely future currency receivables and payables.

They are priced by adjusting the spot foreign exchange rate to reflect the interest rate differential between the two currencies involved for the forward period.


Also known as a Forward foreign exchange contract, or a Foreign exchange forward.


See also