In effect, the methodology allows us to capture in a single number the multiple components of market risk such as curve risk, basis risk and volatility risk. However, each time there is a turmoil in the worlds markets, the limitations of it as a market risk measure are revealed.
There are however challenges, some of which are legislative in nature as well as the microstructure of our financial system. Going forward, MAC will continue, relentlessly, to work towards harmonizing the East African banking supervision and regulation regimes. We are acutely aware that a harmonized regulatory regime will reduce compliance cost and spur regional expansion of banks.