Derivatives, Credit Derivatives and ALM Decisions

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Derivatives, Credit Derivatives and ALM Decisions - Article

Derivatives help ALM change a bank’s **interest-rate, currency, liquidity-related and credit-risk profile** without necessarily altering the underlying assets or liabilities. This article uses practical cases to explain interest-rate and currency hedging, Credit Default Swaps (CDS), Total Return Swaps (TRS), credit-index derivatives, protection buyers and sellers, residual risks, hedge mismatches, and the key ALM decisions required under the current Indian regulatory framework.

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