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Suppose they'd hedged away their interest rate risk. There'd just be another party on the other side of those swaps who'd have gotten wiped out instead, right?
by FooBarBizBazz 4y ago
Suppose they'd hedged away their interest rate risk. There'd just be another party on the other side of those swaps who'd have gotten wiped out instead, right?
- topaz0 4y agoThe point of risk management isn't that you never have any losses, it's that your losses won't be large enough to produce a crisis (e.g. where you can't honor withdrawal requests). If the other party is also managing their risk well, they may take a loss, but they won't be "wiped out".