Multilateral Supervision for the New Financial System

Abstract

The management of risk with the aim of earning profits while complying with the regulations in force is the very essence of banking. Bankers have always had to take decisions about the size and composition of their balance sheets, with particular reference to the risk/return features of assets. Traditionally, risk management involved both day-by-day assessment of customers’ creditworthiness and strategic choices, which were conditioned to a varying extent by regulatory constraints on fund-raising and lending instruments as well as interest rates.