Our comprehensive assessment is aimed at completing this ongoing “healing process”, by identifying remaining pockets of weaknesses and prescribing and fostering the necessary corrective actions to overcome them. How those corrective actions should be financed is clear. Private-sector money should be first in line to reinforce the banking sector.
In both the types, the underlying theory and practice has been the so-called law of one price or, what is the same thing as the no-arbitrage argument, involving replication of derivatives cash flows in the cash markets.