Doctor of Economics, Professor, Head of the Accounting Department of Kyiv National University of Trade and Economics
CONTROL MECHANISM OF BANK'S CURRENCY RISK
Background. The proposed scientific article reveals the urgent issues related to the formation of an effective system of currency risk control to ensure achievement of the purpose of bank's activities in the foreign exchange market without losing financial stability and profitability. A research conducted by studying existing methods of regulating the currency risk of the bank provides an integrated approach to bank’s currency risk control.
Analysis of recent research and publications in this area indicates that scientists discuss the formation of effective methodological tools for monitoring banking transactions in foreign currencies, including the: methods and techniques of auditing transactions in foreign currency in terms of information technology; methodological support and measures to improve audit transactions in foreign currency; study of internal audit operations of banks in foreign currency; methodology for assessing currency risks and installation (control) limits on open foreign exchange position of Ukrainian banks. However, the scientific literature almost does not reveal issues related to the formation of complex control system of currency risk of the bank, that has formed the aim of the study.
Material and methods. The study was based on the data obtained from such sources as scientific articles on this issue, official site of NBU, studies by foreign and domestic scientists and others.
The following general scientific methods were used while studying the formation of control mechanism of bank’s currency risks: analytical, synthetic and comparison.
Results. In general, the object of a control is consequences of bank’s currency risk implementation as a change of the expected result in the bank's activities in the foreign exchange market due to adverse effects of external or internal factors. Achieving the goals and objectives of the control of currency risk at bank currency transactions is through the implementation of a set of measures, the application of which control subjects provide timely detection of deviations of the actual level of currency risk regulation (standard, target) and the adoption of operational management decisions that ensure their removal by regulation.
To establish an effective system of control of bank’s currency risk a consistent implementation of the following steps is required: formation of a system of indicative and control benchmarks of currency risk; development of a system of quantitative control standards of currency risk of the bank; determining the control periods and the formation of the reporting system for compliance with limits of currency risk of the bank; currency risk limits monitoring and regulation of the currency risk of the bank on the results.
Conclusion. The methodical approach to bank’s currency risk control based on the consistent implementation of the relevant steps will allow risk managers of the bank to respond adequately to the growth of the bank's foreign exchange risk.
Keywords: bank, foreign exchange operations of the bank, bank's foreign exchange risk, currency risk control mechanism, limitation.
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