Consequently, we have taken a conservative view on certain areas of national discretion. Some of the areas where the discretion exercised by us is on a more conservative level are: o  State Government guaranteed exposures attract a higher risk weight of 20 per cent, though the framework allows a zero per cent risk weight.
But in doing so, we are handicapped by the extent to which we do not understand important aspects of how financial assets  4  BIS Review 28/2007  are priced.