Can we deduce form this that this regime gives 'credit' to firms for matching assets to liabilities in the form of higher valuation rate hence lower reserves ?
Is there such a 'credit' given under S2 for hypothecating assets? As it seems liabilities are discounted at risk-free rate adj for illiquidity. So where would the lower reserves come from under S2 for firms who match closely?
Last edited by a moderator: Apr 11, 2012