Bank treasuries should help monitor hidden optionality – JPM exec

Risk Live: JP Morgan ALM structurer calls for greater treasury involvement in product design

Finance

Bank treasuries need to be more closely involved in the design and monitoring of financial products, suggests a senior asset-liability management (ALM) structuring official, adding that the 2023 banking crisis showed all too clearly the dangers posed by high levels of optionality embedded in the most common instruments in the banking book.

“There are a lot of products on banks’ balance sheets – deposits, mortgages, credit cards – where banks are essentially allowing clients to be long a certain

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