Bitcoin Forum
September 21, 2018, 08:35:25 PM *
News: ♦♦ New info! Bitcoin Core users absolutely must upgrade to previously-announced 0.16.3 [Torrent]. All Bitcoin users should temporarily trust confirmations slightly less. More info.
 
   Home   Help Search Donate Login Register  
Pages: [1]
  Print  
Author Topic: 2012-10-22 thestreet.com -Central Bank Credit Risk and a New Risk-Free Benchmark  (Read 810 times)
finway
Hero Member
*****
Offline Offline

Activity: 714
Merit: 500


View Profile
October 22, 2012, 04:16:14 PM
 #1

http://www.thestreet.com/story/11743671/1/central-bank-credit-risk-and-a-new-risk-free-benchmark.html


Quote
The inflation expectation curve and the FX forward curve are both observable, at least for major currencies. Calculating the true credit-risk-free curve becomes a simple exercise in subtraction. The interest rate parity is not broken by this transformation. Instead, it's cast under a new, clearer interpretation: Currency credit risk can and should be quantified explicitly.

There is one problem remaining, however. FX rates are all relative; thus the credit-risk-free curves derived this way are also relative. An obvious choice for the common reference asset is gold, although it's not perfect since the supply is not exactly constant.

Bitcoin is perfect, since the supply is rigidly defined by mathematics. Unfortunately we are still a long way from accepting bitcoins as a common reference. Until then, a new gold standard could be established as the common reference, the true credit-risk-free asset against which all currency credit risk is determined and the corresponding true credit-risk-free rate is calculated.

Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1537562125
Hero Member
*
Offline Offline

Posts: 1537562125

View Profile Personal Message (Offline)

Ignore
1537562125
Reply with quote  #2

1537562125
Report to moderator
TraderTimm
Legendary
*
Offline Offline

Activity: 2310
Merit: 1066



View Profile
October 22, 2012, 09:58:17 PM
 #2

Interesting, a bit surprised to see something like this on thestreet.com, a lot of investors read that site. Guess it is just one more datapoint of bitcoin being exposed to more people.

fortitudinem multis - catenum regit omnia
Pages: [1]
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!