AIA's quality investment portfolio with moderate equity exposure and a high level of
currency matching between assets and liabilities underpins the persistently low earnings volatility.
Currency matching may lower the direct exchange rate risk faced by banks, but the practice of extending mostly foreign currency-indexed loans exposes banks' clients who are not hedged to that same risk.
The net effect on the Tier 1 ratio will be neutral to positive and the
currency matching of risk-weighted assets and the capital base better aligned, SEB said.
For Member States that are part of the Euro zone, 70%
currency matching would leave greater scope for diversification.
But he said it will take at least 10 years before the region's common currency grows into a key international
currency matching the dollar.
The company maintains solid asset and liability management (ALM), reflecting suitable duration and
currency matching.
For Member States which are part of the Euro zone, 70%
currency matching would leave great scope for diversification.--
Currency matching requirements (that is, an obligation to invest assets in the same currency in which liabilities are expressed) should also be abolished.