Part I The Elements of Bank Financial Supervision, 1 Introduction to Banks and Banking
- Credit risk — Securities — Bonds
1.01 In order to understand bank regulation, it is first necessary to understand what a bank is. Everyone knows that a bank is an institution which takes deposits from the public and lends the monies thus raised, but even the simplest bank is more complex than this. Bank balance sheets include a range of types of exposures to a range of types of counterparties, and even where these exposures are as simple as fixed rate, fixed term single repayment loans, the interaction of those loans with other parts of the balance sheet may itself give rise to risks. 1.02 This...