185. Institutions should take into account possible significant weaknesses that may be built into …

Institutions should take into account possible significant weaknesses that may be built into internal models with a possible underestimation of currency depreciation in relation to the client’s ability to service its debt, taking into account the following indicative elements:

• a) monetary policies during a crisis period are often focused on stimulating the real economy by significantly decreasing reference interest rates, with potentially misleading information from internal models regarding these indirect effects; and
• b) currency appreciation may be partially offset by falling interest rates and this may cause an underestimation of risk related to foreign exchange lending because, in zero interest rate environments, such a trade-off may not be possible in the long term.

1. Forbhreathnú

1.1 Tagairtí

1.2 Ceanglais aitheanta

1.3 Caighdeáin ghaolmhara

2. Ceanglais aitheanta

3. Caighdeáin ghaolmhara

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