Cross-border exposures and
country risk
The definitive study of this
important topic its purpose, practice and implications
The international financial
system has come under strain several times in recent years, and analysis has shown that
most crises originated from the risks built into cross-border exposures.
Assessment and monitoring of
cross-border exposures and country risk are essential activities for international lending
agencies such as government bodies, banks, multinational corporations and other investors.
Inadequate risk management could have a destabilising effect on both lender and borrower
and could result in a major international financial crisis.
This new and completely
revised edition of Thomas E Krayenbuehl's classic handbook clearly shows how the various
players can quantify and manage the complex factors involved in order to minimise the risk
and avoid potentially catastrophic consequences. It provides both a rigorous analysis of
the current situation and a guide to meeting the challenges of the future.
Just some of the things
you'll discover...
How
to succeed in cross-border lending and investment through good assessment, monitoring and
hedging of country risk How the Tequila and Asian crises came about, and the lessons
learned The likelihood of future crises and the potential causes The latest problems to
beset the international financial system The recent developments in cross-border financing
Why the problem of contagion occurs between seemingly unrelated markets The enormous need
for global capital to bring about sustainable economic development in the developing
world, and the role of the major players in fulfilling it The numerous factors that
constitute and influence a specific country risk The responsibilities of all the parties
involved, from the IMF and the World Bank to the industrialised and developing nations,
the regulators and the rating agencies
How this study helps you
This lucid and authoritative
handbook will help you to:
About the author
After graduating as a Doctor
of Law in 1961, Thomas E Krayenbuehl began a career that has involved him in banking and
financial control and management in the USA, Switzerland and Germany. In 1998 he retired
from Union Bank of Switzerland, now UBS AG. At UBS his responsibilities were always
associated with business development and risk management in the developing world. He is
now an independent consultant working for, among others, the International Finance
Corporation in Washington and the Swiss Government on projects in the developing world.
Contents
1. Overview
Introduction
The debt crisis of the 1980s The Brady Plan The Tequila crisis The Asian crisis The latest
problems Heavily indebted poor countries recent developments in cross-border financing
Conclusions References
2. The need for capital
Introduction
The borrowers Gross domestic investment Capital needs Domestic funds Cross-border funds
Conclusions References
3. Risks in cross-border
exposures and their assessment
Introduction
Transfer risk Factors in influencing cross border foreign exchange flows Political risk
Relating transfer and political risk References
4. Monitoring of cross-border
exposures and hedging of currency risks
Introduction
The establishment of country limits Monitoring cross-border exposures The change of
country risk quality and its consequences Hedging of country risk The case of contagion
Outsourcing risk assessment The rating agencies Conclusions References
5. Responsibilities
Introduction
The International Monetary Fund (IMF) The World Bank Group The regional multilateral
financial institutions The industrialized countries The developing countries The
regulators The rating agencies Conclusions References
6. Conclusions
Annex
1: Glossary Annex 2: Articles of Agreement of the International Monetary Fund, Article IV
Annex 3: Selected sovereign ratings for foreign currencies of developing countries Annex
4.1: Country risk rating by The International Country Risk Guide Annex 4.2: Country risk
rating by the International Investor Annex 4.3: Country risk rating by Euromoney Annex 5:
Alternative exchange rate regimes
224 pages