In its December statement, the FOMC indicated that it intends to leave the policy rate near zero well past the time that the unemployment rate falls below 6.5 percent, especially if projected inflation continues to run below the FOMC’s 2-percent target.
One is the use of internal credit risk models as a possible substitute for, or complement to, the current structure of ratio-based capital regulations. Another approach goes one step further and uses market-like incentives to reward and encourage improvements in internal risk measurement and management practices. A primary example is the proposed pre-commitment approach to setting capital requirements for bank trading activities.