Thus far, it has not been a consequential development from a forecasting point of view. It is not clear how much of the rise in LIBOR (and hence BBSW) is due to structural changes in money markets and how much is temporary. In the last couple of weeks, these money market rates have declined noticeably from their peaks.
Ladies and Gentlemen, Risk Management does indeed lie at the heart of Basel II and it is imperative that a “risk management culture” be inculcated in banks as a precursor for implementation of the new Accord. Towards this end, the Central Bank conducted a survey in 2004 that indicated gaps in Risk Management Practices in Kenyan Banks.