However, at the same time, supervisors were acutely aware that many other institutions had limited capabilities in this area and that many banks may have been hesitant to develop more sophisticated internal measurement systems prior to the determination of a supervisory approach.
Accordingly, in 1993, supervisors proposed to use the results of internal models for evaluating the quantitative level of interest rate risk exposure at individual institutions. While the rulemaking process was ultimately longer than desired, it did demonstrate the clear intent of supervisors to encourage and provide incentives for improvements in risk management and to take full advantage of such advances when possible.