The IMF's most recent Global Financial Stability Report articulated six concerns about significant risk transfer (SRT) transactions. In response, the ACC has sent a comment letter that responds to their concerns and explains why SRT transactions do in fact represent a true credit hedge and decrease the bank's credit exposure. The letter also explains how SRT transactions increase banks' loss absorption capacity and are typically collateralized, which mitigates potential counterparty credit risk. Importantly, the letter explains how SRTs effectively reduce risk to the overall financial system and correspondingly decrease the potential for systemic risk.

For further information please contact Joe Engelhard ([email protected])