![]() A regulatory model with minimum quantitative standards may actually impede progress toward developing more precise risk measurement systems.The additional costs imposed by such capital standards may shift a significant volume of trading activity to less regulated organizations. The simple aggregation of capital for credit and market risks also overestimates the capital necessary for a diversified firm because potential losses from these risks are unlikely to be realized simultaneously. Such capital requirements are out of proportion to actual risks in the foreign exchange market. The extremely conservative quantitative standards in the proposal (including the multiplication factor, the holding period, restricted correlations and the confidence interval) would require banks to hold capital against daily price movements of as much as 24 standard deviations.However, the latest proposal, particularly the quantitative standards for using internal models, raises two major concerns: The Foreign Exchange Committee is encouraged that a number of its recommended changes to the April 1993 Basle Committee proposal on market risk ("BIS proposal") were incorporated in the current BIS proposal, most notably the use of banks' internal models for calculating market risk and the extension of Tier 3 capital to cover foreign exchange as well as other market exposures. In 2002, however, the deutsche mark ceased to be legal tender after the euro, the monetary unit of the European Union, became the country’s sole currency.The Foreign Exchange Committee ("the Committee") supports the effort of the Basle Committee to establish international guidelines for applying capital charges to the market risks incurred by banks. In 1990 the deutsche mark became the official currency of reunified Germany East German marks became obsolete and were exchangeable at parity with the West German mark. In 1948 the deutsche mark (DM “German mark”) was introduced in West Germany, and over the next several decades it developed into one of the world’s leading currencies, challenging the dollar and pound sterling on international markets. During the era of Nazi Germany (1933–45), the Reichsmark became the country’s official monetary unit, and the currency was adorned with the swastika. To stem currency instability and to stabilize the economy, the gold mark was replaced by the Rentenmark in 1924, at which time a U.S. After World War I the mark collapsed as Germany suffered from hyperinflation. The gold mark, equal to 100 pfennig, was adopted to replace the taler and the guilder in 1873, soon after the creation of the German Empire, and became the standard of value and the money of account for the empire. In the 19th century the mark was a common small coin in the German states, but its value varied between states. As a unit of account, it was employed during the Middle Ages for the payment of large sums the small silver coins of varying size and quality were melted and cast into lumps on which were stamped the weight and purity of the silver. The early history of the term can be traced back at least to the 11th century, when the mark was mentioned in Germany as a unit of weight (approximately eight ounces) most commonly used for gold and silver. ![]()
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