In other words, the Fed will use regulatory instruments to control credit growth, risk taking, and leverage.

The point at which credit risk becomes exchange rate redenomination risk is ambiguous.

Internal control and risk management

In others, banks need to re examine their procedures for credit risk assessment and credit allocation.

Credit risk is best hedged through diversification across uncorrelated credits.

Credit risk in the mortgage market is being assumed by the government, and market risk by the Fed.

But, if more risk builds up through continued expansion of shadow credit, this risk buffer may become inadequate.

(a) Enterprise risk management and internal control framework

In recent years, the central government has tightened its control over the banking sector, undermining the financial system s development, not least by impeding banks ability to assess credit risk.

(e) Create a risk and compliance section for better risk control of investments and operations

This volume of assets allows the Fund to expand its investment frontier and requires it to build up a risk control mechanism, to control comprehensively not only investment risk but also operational risk and technology risk.

While credit expansion can offset this to some degree, increased production based on credit expansion inevitably leads to large scale financial risk.

(b) Reviewing risk management and the internal control system

Those who take the risk must be in control.

Indeed, a chain of financial intermediaries now earn fees without bearing the credit risk.

It's using this as risk control, not instead of action.

This risk was highlighted by the recent downgrade of Italy s credit rating by Standard Poor s.

In the past, banks kept loans and mortgages on their books, retaining the credit risk.

With the government assuming credit risk, mortgages become as safe as government bonds of comparable maturity.

From a financier's perspective, the cost and availability of credit are guided by perceptions of risk.

They range from subdued bank lending to unusually high risk aversion, and from discredited credit vehicles to the withdrawal of some institutions from credit intermediation altogether.

This would, in its turn, allow banks and other lenders to better assess enterprise risks using modern ICT based techniques for credit risk assessment and credit scoring.

(d) Effective and efficient systems of risk management and internal control and

In addition, new methodologies have been developed for more sophisticated risk control.

In the meantime, manual control will be exercised for high risk cases.

For example, the purchasers of a commodity can make direct payments to the financiers, effectively reducing credit risk risks can be shifted from the borrower to field warehouses banks can take control of the goods.

Even if this sounds unfair, it is logical to expect rating agencies, which had been lax in evaluating credit risk, now to be rigorous in assessing all forms of risk, including sovereign risk.

Similarly, positioning the IMF as a general risk insurer by introducing precautionary credit lines above normal access limits would be compatible neither with its mission to provide financial assistance on deliberately non risk adjusted terms nor with the current system of refinancing short term Fund credit through risk free official reserves.

quot The Fund will benefit from the new custody arrangements through realization of improved internal control as well as reduced counterparty risk, legal risk and operational risk.

Innovative financial instruments such as derivatives and credit default swaps enabled the distribution of risk throughout the economy.

Clarifying ultimate responsibility for credit quality and risk would also reduce intermediation costs by eliminating the need to resort to informal channels, such as credit guarantee and trust companies.

(For ideological reasons, the Conservative Government declined to use alternative mechanisms to control the explosion of credit.

Investors thus assumed that they did not need to assess the credit risk of eurozone countries (national) public debt.

Loans are based on the performance of the borrower in the chain, rather than on the borrower's credit risk.

The chief will be responsible for risk control of the Fund's investments as a whole in terms of portfolio risk, operational risk and compliance risk, and will plan and perform the oversight of performance measurement, investment risk analysis and operational risk analysis, including risk arising from sub adviser and service provider relationships.

Like banks, all these financial institutions are subject to liquidity or rollover risk the risk of going belly up if their creditors do not rollover their short term credit lines.

Lee also must confront factors beyond his control, such as soaring oil prices and the global credit crunch.

The immediate causes are well known. They range from subdued bank lending to unusually high risk aversion, and from discredited credit vehicles to the withdrawal of some institutions from credit intermediation altogether.

There is now a serious risk of a systemic meltdown in US financial markets as huge credit and asset bubbles collapse.

Germany will look like a better credit risk, thereby allowing it to fund its current budget deficits more easily and cheaply.

Second, controlling asset bubbles requires control not only of the money supply, but also of the availability of credit.

(h) Border control strengthened through technical equipment support and enhanced risk assessment, targeting and profiling skills

Classical and haemorrhagic dengue fever are kept under epidemiological control in the country's areas at risk.

Credit Where Credit is Due

Meanwhile, prolonged low interest rates contributed to a chase for yield in the financial sector that resulted in disregard of credit risk.