Volatility has revived, however, since the third quarter, reflecting swings in the pendulum for expectations of monetary tightening in the United States, accentuated by the approach of the final stage of tapering, and more recently, worries about the health of the global economy. The Fed has stated many times that tightening will be gradual, and its start and pace, datadependent.
This posed a challenge to risk modeling as present values depend in a complex way on market factors like interest rates or exchange rates. Therefore, it is not surprising that the growth of credit trade was accompanied by rapid technological progress, for instance, by the development of new credit portfolio models.