Multiple Sclerosis Research Paper Example | Topics and Well Written Essays - 1500 words

Multiple Sclerosis - Research Paper Example A few ideas have been gathered that pinpoint some of the more known reasons as to what causes multiple sclerosis, as well a few concepts that are still being considered but have yet to fully be proven. While multiple sclerosis has not been connected to genes, it has been found that a variety of genetic variations can increase the risk of developing the disease; there are specific genes that have been directly linked to the cause of multiple sclerosis in a person. A person that has a relative that has multiple sclerosis stands a higher chance at developing the disease; parents and children, and siblings, can possess the disease that makes it possible for the other to develop it also. Indeed, multiple sclerosis â€Å"has an overall familial recurrence rate of 20% (Compston, 2008).† The less that a person is related to someone, such as the difference between siblings and half-siblings, the less chance that there is that multiple sclerosis will be developed. There are certain genes that are connected with multiple sclerosis, and they need to be present in a family member to make the disease possible. Environment plays a fairly decent role in what causes multiple sclerosis. A decreased exposure to sunlight has been connected to those with multiple sclerosis, as well as the distance someone lives from the equator, though this is not as common. Anything within that environment, such as stressful events or cigarette smoke, as well as characteristics that can bring about infections to a person, thus damaging their immune system, can cause multiple sclerosis. Multiple sclerosis is capable of developing at any age, though the most common age group to develop the disease is between twenty and forty years of age. Women are twice as likely to develop multiple sclerosis than men are. Caucasians, especially those that are from Europe or can trace their linage to Europe, are at an increased risk of

The Black Economy In India

The Black Economy In India It has been reported that, Black money today is created at every level of the Indian economy. As the Parallel Economy is unaccounted for, the official National Income accounts do not represent the true state of the economy. In light of this statement, Give the future directives on the parallel economy and cite the practical obstacles faced on the way to fight the black economy. INTRODUCTION Parallel economy connotes the functioning of an unsanctioned sector in the economy whose objectives run parallel, rather in contradiction with the aroused social objectives. This is variously termed as black economy, unaccounted economy, illegal economy, subterranean economy, unsanctioned economy or hidden economy. A hidden economy in its broadest sense may consist of a) illegal economy, such as money laundering, smuggling, etc; b) unreported economy including tax evasion; c) unregulated economy, ie economic activities outside regulations. The money laundering is a lack of transparency standards in bilateral and multilateral trade with flourishing offshore banking in tax havens has allowed it to grow unabated in past couple of decades. Experts estimate that around 50 per cent of GDP-or about Rs 33 lakh crore of black money-is generated every year through corruption at various levels. While black money which operates within the country can be productive, what goes overseas is seen as non-productive. Impact of Black Money The circulation of black money has adversely affected the Indian economy in several ways. It leads to the misdirection of precious national resources. It has enormously worsened the income-distribution. The fixed income salary class finds itself ever be the lower rung of the income-ladder as they pay taxes. They are not able to catch up with the people in business, or in professions, or many of those employed who make money by black activities. Many high placed official and honest employees earn much less than an average small shopkeeper in big cities like Bombay and Delhi. The existence of a big-sized unreported segment of the economy is a- big handicap in making a correct analysis and formulation of right policies for it. Black money results in transfer of funds from India to foreign countries through clandestine channels. Such transfers are made possible by violations exchange regulations through the device of under invoicing of exports and over-invoicing of imports etc. Black money requires for its protection, proliferation and expansion of a service organization composed of musclemen, touts and brokers to combat the forces of law and order on the one hand and on the other hand, there are income tax advisers, or chartered accountants in the pay of black money operators. There are contact men, liaison officers, Dallas , who negotiate favors from top bureaucracy and political bosses through bribes of black money. Black money has corrupted our political system in a most vicious manner. At various levels, MLAs, MPs, Ministers, party functionaries openly go on collecting funds for party or elections. Ministers dole out favors of crores by accepting black money donations of a few lakhs from businessmen National policies are, therefore, being bent in favor of the big business under the pressure of black money. Causes inflations- The politics of black money thus has corroded the moral fiber of Indian polity. Ministers dole out favors of crores by accepting black money donations of a few lakhs from businessmen. National policies are, therefore, being bent in favor of the big business under the pressure of black money. Due to the pernicious impact of black money on the Indian economy and polity that the Wanchoo Committee concluded: It is, therefore, no exaggeration to say that black money is like a cancerous growth in the countrys economy which, if not checked in time, is sure to lead to its ruination. Survey on Bribery and Corruption India lost a staggering $462 billion in illicit financial flows due to tax evasion, crime and corruption post-Independence, according to a report released by Washington-based Global Financial Integrity. The document on the Survey on Bribery and Corruption was released at the first annual fraud conference organized by the Association of Certified Fraud Examiners here on June 21, 2011. The report stated that 68% of Indias aggregate illicit capital loss occurred after Indias economic reforms in 1991, indicating that deregulation and trade liberalization actually contributed to or accelerated the transfer of illicit money abroad. Reports that wealth is stashed in offshore destinations and tax havens also goes to indicate the extent of the problem, the report said. The KPMG India Fraud Survey 2010 suggested that today India is faced with a different kind of challenge. It is not about petty bribes, popularly known as bakshish anymore, but scams to the tune of thousands of crores that highlight political and industry nexus which if not checked could have far reaching impact on the economy. India has been facing governance challenges from within at various levels for a long time. Rigid bureaucracy, complex laws and long-drawn judicial process deter people from considering legal recourse in corruption cases. India has around 35 million court cases pending. Besides lack of manpower and poor infrastructure facilities, other factors hindering the anti-corruption drive include lack of teeth in the legal framework, the study said. A large number of respondents stated that organizations pay bribes to win and retain businesses. This is a typical scenario where organizations tend to overlook the implications of encouraging these practices and often look only at short term benefits achieved. They fail to realize that what has worked in their favor could also land into trouble later and lead to adverse consequences for them, the report said. The study noted that another key area where business is impacted is in the area of mergers and acquisitions. Nearly 37% respondents opined that the corruption could impact the valuation of a company thereby denying shareholders of a fair price. Moreover, it could also make it difficult for them to find a suitable business partner, thereby seriously impacting the growth prospects of the business, the study said. MEASURES TAKEN BY GOVERNMENT TO TACKLE BLACK MONEY There is no reliable information about the money of Indians in undisclosed bank accounts outside the jurisdiction of the country. There are various estimations based on various assumptions and presumptions which may not be correct. Further there is a marked difference in the amount of these estimates. A proposal for getting a study conducted to estimate the quantum of black money both inside and outside the country has already been approved by Union Finance Minister. The following Government institutes have been approved in March, 2011 for conducting separate studies on black money: National Institute of Public Finance and Policy (NIPFP); National Institute of Financial Management (NIFM); National Council of Applied Economic Research (NCAER). Memorandum of understanding has been signed between CBDT and each of three institutes on 21.03.2011. The study will be completed within a period of 18 months from the date of MOU. Government has formulated a five pronged strategy to tackle the menace of black money which is as below: Joining the global crusade against black money, Creating an appropriate legislative framework, Setting up institutions for dealing with Illicit Funds, Developing systems for implementation (new manpower policy); Imparting skills to the manpower for effective action (constant training for skill development). In line with above strategy, the Government has taken several steps in the last two financial years, the details of which are discussed in the following paragraphs. Joining the global crusade against black money: Black money does not limit itself to the geo- political boundaries. It transcends borders and has become a global problem. The countries across the world have started a concerted global effort and as a part of global effort against black money, India has played a proactive role in pointing out deficiencies in the assessment of various countries by the Peer Review Group of the Global Forum. Government is also playing an active role in ensuring that these countries remove the deficiencies to bring more transparency. India has joined the Task Force on Financial Integrity and Economic Development in order to bring greater transparency and accountability in the financial system. India has joined as the 34thmember of Financial Action Task Force (FATF) on 25th June 2010. FATF membership is important as it will help India to build the capacity to fight terrorism and trace terror funds and to successfully investigate and prosecute money laundering and terrorist financing offences. India has j oined the Asia Pacific Group (APG)against Money laundering. The 14th annual Plenary of Asia Pacific Group (APG) was held in Kochi from 18-22 July, 2011. More than 320 delegates from 41 jurisdictions, observers and various organizations attended the Plenary which was inaugurated by the Union Finance Minister. India is the co-chair of this forum till July 2012. India has gained Membership of the Eurasian Group (EAG)in December 2010. India has joined the Egmont Groupwhich is an international network fostering improved communication and interaction among Financial Intelligence Units (FIU). India is an active member of G 20 and has played a key role both in identifying issues and drafting communiquà ©s. In the G 20 Seoul Summit, November 11-12, 2010, a clause countries to further enter into Tax Information Exchange Agreements wherever required by the partner country was incorporated in the communiquà © at the instance of India. Creating an appropriate legislative framework: The Government has been constantly trying to strengthen the legislative frame work to control generation of black money in the country as well as control the flight of such illicit fund to foreign shores. In pursuance of this India has so far completed negotiations of 22 new Tax Information Exchange Agreementswith various tax heavens. Nine of these agreements have also been approved by the cabinet. India has initiated process of negotiation with 75 countries to broaden the scope of Article concerning Exchange of Information to specifically allow for exchange of banking information and information without domestic interest. As on date, it has completed negotiation with 18 existingDouble Tax Avoidance Agreement (DTAA) countries to update this Article. These agreements have also been initialed. 22 new DTAAs have also been finalized where the Exchange of Information Article is in line with the international standards. In short negotiations/renegotiations of DTAAs with 40 countries have b een completed. DTAAs with Switzerland (amendment), Norway (revised), Mozambique (new), Colombia (new), Ethiopia(new), Georgia(new), Taipei(new), Lithuania(new) and Tanzania(revised) have been signed. The protocol amending our tax treaty with Switzerland was signed on 30th August 2010 and has been approved recently by the Swiss Parliament (on 17thJune 2011). After following the mandatory constitutional process the DTAA will become operational. It will enter into force when Switzerland completes its internal process. Upon entry into force it will allow India to obtain banking information (as well as information without domestic interest) from Switzerland in specific cases for a period starting from 1st April 2011. There are certain countries or territories outside India which do not effectively exchange information with India as an anti-avoidance measure. The Government has enacted legislation to prescribe a tool box of counter measures against these non-cooperative jurisdictions. For this purpose, section 94A has been inserted into the Income-tax Act through Finance Act, 2011. This section gives an enabling power to the Central Government to notify any country or territory outside India, having regards to lack of effective exchange of information by it with India, as a notified jurisdictional area. Once the country/territory as such is notified as a non-cooperative jurisdiction, transactions with residents of such country/territory are subject to higher withholding, certain disallowances and the transactions are also subject to transfer pricing regulations. The Government has proposed the following specific new measures for unearthing black money in the Direct Taxes Code Bill:For the purpose of levy of wealth tax, taxable assets have been defined to include deposits in banks located outside India in case of individual, unreported bank deposits in case of others, interest in a foreign trust or any other entity (other than foreign company) and any equity or preferential shares held in a controlled foreign company. The General Anti Avoidance Rule (GAAR)has been incorporated to deal with aggressive tax planning devices used to circumvent tax laws. Specific Controlled Foreign Company (CFC) rules have been incorporated to bring to tax passive income earned by residents from substantial shareholding in companies situated in low tax jurisdictions. A reporting requirement has been introduced making it obligatory on the part of resident assesses to furnish details of their investment and interest in any entity outside India in the form and manner as may be prescribed. According to the Global Financial Integrity Report, major channel for illicit outflow is transfer of funds through mispricing which accounts for 77.6% of total illicit outflows. The existing transfer pricing provisions of the government, which were introduced in the year 2001 are not detailed provisions as compared to transfer pricing provisions of developed countries. It was felt that there is need to upgrade these transfer pricing provisions to meet the challenges of growing intangible economy and various complex cost sharing arrangements. As per directions of FM, DGIT (International Taxation) has constituted a committee to look into the issue of revising the transfer pricing provisions. The committee has already submitted its interim report which is under consideration.The Prevention of Money Laundering Act (PMLA)was amended on 1st June 2009, whereby the predicate offences listed in the Schedule of the Act were substantially increased. This amendment has tremendously widened the s cope of Money Laundering Investigations. Setting up institutions for dealing with Illicit Funds; Government has decided to set up Exchange of Information (EoI) Cell for an effective exchange of information to curb tax evasion. Efforts are on to put the cell in place under Foreign Tax Division of CBDT. Government has approved the creation of the Directorate of Income Tax (Criminal Investigation), in the Central Board of Direct Taxes. The DCI will perform functions in respect of criminal matters having any financial implication punishable as an offence under any direct tax law. Government has set up Income tax Overseas Units in two Indian Missions abroad. Eight more such units are being setup in the current Financial Year to strengthen information exchange mechanism. In order to augment the reach of the Directorate of Enforcement, the Government has approved upgradation of five existing Zonal offices as Regional offices and five existing Sub Zonal offices as Zonal offices. It has also approved creation of a new Zonal office and 16 new Sub zonal offices of Enforcement Directorate a cross the country. The Process of filling up the additional posts sanctioned by the Government as also for upgradation of the existing offices and setting up of new offices of Enforcement Directorate has started. As per the Action Plan, the Ministry of Finance is filling up the Group A posts of the Directorate in three phases. Developing systems for implementation: Government has doubled the strength of Foreign Tax Division, which deals with the work of exchange of information. The Directorate of International Taxation and Transfer Pricing in the Income Tax Department have also been strengthened as major part of the flow of illicit money outside of India takes place through mispricing of international transaction.In a bid to strengthen the Enforcement Directorate, the Government has approved creation of 1318 new posts at various levels. The process of filling up of these posts has already been started by the Deptt. of Revenue. Imparting skills to the manpower for effective action: As a part of capacity building and skill development, 51 senior Officers were sent abroad for specialized training in the field of International Taxation and Transfer Pricing in F.Y. 2010-2011.Since skill up gradation in international tax and transfer pricing require substantial time and resource, a posting policy has been approved which provides that officers may be posted in the Directorate for the period not less than five years. Apart from the above the Government has also taken the following measures- The Government has constituted a Committee on 27th May, 2011 under the Chairmanship of Chairman, Central Board of Direct Taxes (CBDT) to examine ways to strengthen laws to curb the generation of black money in the country, its illegal transfer abroad and its recovery. The Committee include Member (LC), CBDT, Director Enforcement (ED), Director General of Revenue Intelligence (DRI), Director General (Currency), Joint Secretary (FTTR), CBDT; Director,(FIU-IND) as Members. The Committee will examine the existing legal and administrative framework to deal with the menace of generation of black money through illegal means including, inter alia, (a) Declaring wealth generated illegally as national asset; (b) Enacting/amending laws to confiscate and recover such assets; and (c) Providing for exemplary punishment against its perpetrators. The Committee will also consult all stakeholders and submit its report within a period of six months. 6.1 The second meeting of the Committee on the Black-Money was held on 29th July, 2011 and it has been decided that the Committee would hold its next meeting in September 2011 and in the meanwhile; (i) Letters have been written to various Industry Associations, Voluntary Organizations, ICAI, ICWAI and NASSCOM requesting them to give suggestions/views on existing legal and administrative framework available under the various laws to deal with the menace of generation of black money through illegal means, (ii) More than 3300 comments on the issue of black money have been received from the public via-e-mail which are being examined. (iii) Suggestions for improving the respective laws sent by the organizations, as well as gist of useful suggestions received through email, would be compiled and circulated. (iv) Reminders will be sent to industry and trade associations, ICAI and ICWAI for expediting their suggestion. (v)Letters have also been issued to Chief Commissioners of Income Tax (Cadre Controlling Authorities), Director Generals of Income Tax (Training), National Academy of Direct Taxes, requesting them to give suggestions/views on existing legal and administrative framework available under the various laws to deal with the menace of generation of black money through illegal means. PRACTICAL OBSTACLES FACED ON THE WAY TO FIGHT THE BLACK ECONOMY Pricing Goods acquired illegally take one of two price levels: They may be cheaper than legal market prices. The supplier does not have to pay for production costs or taxes. This is usually the case in the underground economy. Criminals steal goods and sell them below the legal market price, but there is no receipt, guarantee, and so forth. They may be more expensive than legal market prices. The product is difficult to acquire or produce, dangerous to handle or not easily available legally, if at all. If goods are illegal, such as some drugs, their prices can be vastly inflated over the costs of production. Black markets can form part of border trade near the borders of neighboring jurisdictions with little or no border control if there are substantially different tax rates, or where goods are legal on one side of the border but not on the other. Products that are commonly smuggled like this include alcohol and tobacco. However, not all border trade is illegal. Consumer Issue Even when the underground market offers lower prices, consumers still have an incentive to buy on the legal market when possible, because: They may prefer legal suppliers, as they are easier to contact and can be held accountable for faults; In some jurisdictions, customers may be charged with a criminal offense if they knowingly participate in the black economy, even as a consumer; They may feel in danger of being hurt while making the deal; They may have a moral dislike of black marketing; In some jurisdictions (such as England and Wales), consumers in possession of stolen goods will have them taken away if they are traced, even if they did not know they were stolen. Though they themselves commit no offense, they are still left with no goods and no money back. This risk makes some averse to buying goods that they think may be from the underground market, even if in fact they are legitimate (for example, items sold at a car boot sale). However, in some situations, consumers can actually be in a better situation when using black market services, particularly when government regulations and monopolies hinder what would otherwise be a legitimate competitive service. For example: Unlicensed taxicabs. In Baltimore, it has been reported that many consumers actively prefer illegal taxis, citing that they are more available, convenient, and priced fairly. Illegal Drugs From the late 19th and early 20th centuries, many countries began to ban the keeping or using of some recreational drugs, such as the United States war on drugs. Many people nonetheless continue to use illegal drugs, and a black market exists to supply them. Despite law enforcement efforts to intercept them, demand remains high, providing a large profit motive for organized criminal groups to keep drugs supplied. The United Nations has reported that the retail market value of illegal drugs is $321.6 billion USD. Although law enforcement agencies intercept a fraction of the illegal drugs, and incarcerate hundreds of thousands of wholesale and retail sellers, the very stable demand for such drugs and the high profit margins encourages new distributors to enter the market without an increase in the retail price. Many drug` legalization activists draw parallels between the illegal drug trade and the Prohibition of alcohol in the United States in the 1920s. In the United Kingdom, it is not illegal to take drugs, but it is illegal to possess them. This can lead to the unintended consequence that those in possession may swallow the evidence; once in the body they are committing no crime. Prostitution Prostitution is illegal or highly regulated in most countries across the world. These places form a classic study of the underground economy, because of consistent high demand from customers, relatively high pay, but labor intensive and low skilled work, which attracts a continual supply of workers. While prostitution exists in every country, studies show that it tends to flourish more in poorer countries and in areas with large numbers of unattached men, such as around military bases. Prostitutes in the black market generally operate with some degree of secrecy, sometimes negotiating prices and activities through codewords and subtle gestures. In countries such as the Netherlands, where prostitution is legal but regulated, illegal prostitutes exist whose services are offered cheaper without regard for the legal requirements or procedures- health checks, standards of accommodation, and so on. In other countries such as Nicaragua where legal prostitution is regulated, hotels may require both parties to identify themselves, to prevent the rise of child prostitution. Learning from the Article Through this Article we learn that:- Introduction to Black Economy in India. The Measures taken by Government to curb Black Economy. The Challenges faced while tackling Black Economy CONCLUSION Parallel economy is a new threat for the Indian economy. In India parallel economy is expanding very rapidly. Government of India introduced commissions under Kaldor, Wanchoo, Rangnekar, Chopra, and Gupta for estimating black economy. There are many factors like Controls and Licensing System, Higher Rates of Taxes, Ineffective Enforcement of Tax Laws, Inflation, Funding of political parties etc. that influence its growth. In India amount of black money are increasing continuously which badly impacts the economic growth of the nation. Such money is a new challenge for Indian economy. Indian economy is badly affected by black money as it is underestimating GDP, increasing inequality of income, increasing illegal activities etc. Over the past 50 years, the government has at various times announced several schemes offering opportunities to bring black money overboard but the result are not so effective. Some of these schemes are: introducing the scheme of Special Bearer Bonds, demonetizi ng high denomination currency notes, stringent raids and scheme of voluntary disclosures. These instruments are expected to reduce the volume of the black economy.

A Look Into the Human Genome Project :: Science Technology Genetics Papers

A Look Into the Human Genome Project Would people buy a set of books that repeated the same four letters in random order page after page? Or would this information be more convenient to the public if on a computer disc? Many people would agree with the idea that this set of books would be boring. Surprisingly, America and the rest of the world are buying the information in this set of books. In fact, these books contain the human genome. The mapping of the genome (or writing this set of books) is a 15-year project that has brought many ethical issues to attention. History of the Human Genome Project The United States Department of Energy and the National Institutes of Health joined forces in 1990 to kick off a 15-year effort to reach two goals: Catalog the genes in human DNA Determine the three billion bases (the four letters in the set of books) in human DNA that encode for genes (U.S. Dept. of Energy 1998). On the international level, the Human Genome Organization (HUGO) was founded. Their goal is to encourage trading of research findings and techniques (National Reference Center 1998). From the national standpoint it brings back memories of The Manhattan Project. Internationally, this cooperation is unprecedented (Shinn 1996). Before the organization of the Human Genome Project, the Department of Energy had biologists and physicists studying the Hiroshima survivors. From this data a GenBank was made. This was the first database for DNA sequences (Gert, et al. 1996). Watson, who won the Nobel prize for his discovery of the double helix, was appointed as the first director of the Human Genome Project. He appropriated three percent of his budget to ethical, legal, and social issues (ELSI) involved with the project (Shinn 1996). Even from the beginning it was anticipated that this project could have both positive and negative outcomes. One goal to be reached after five years was to have markers every ten centimorgans (Gert, et al. 1996). This goal was stated in 1991 and achieved in 1994 - a year ahead of schedule - when a map with markers every two to five centimorgans was published (Casey, et al. 1995). Sequencing would then follow with a focus on areas of disease and in reducing human error. The main goal for the next five years would be markers every one centimorgan (Gert, et al. 1996). Technical Aspects Ideally, the final map will have both physical and genetic information.

Irc, Cva and Var †New Methods in Basel Essay

I. Introduction Last financial crisis was seen as a strong slap on the global economy. It has awakened Basel Committee on Banking Supervision (BCBS) about the importance of an aggregation between market and credit risks that banks have to cope with. In accordance with Saunders and Cornett (2011), definition of market risk is â€Å"the risk related to the uncertainty of an FI’s (financial institution) earnings on its trading portfolio caused by changes, and particularly extreme changes, in market conditions†. Interest rate risk and foreign exchange risk are some typical example for market risks (Saunders and Cornett, 2011). Meanwhile, credit risk is defined as risk increased when borrowers, bond issuers and counterparties in derivatives transaction may default (Hull, 2010). According to Madigan (2010), it would be greater risks when credit and market risks associated than the sum of individual factors. Therefore, it might lead to worse impacts to banks’ operations. From the crisis’s consequences, Nout Wellink – chairman of the Basel Committee believes that it is necessary for supervisors to learn experiences from recent events, thus set up new methods for banks to cope with fore problems (Ferry, 2008). These new rules which are reflected in Basel III support each other to efficiently measure and manage correlated risks, thus calculate capital requirement to cover these risks. A report by Goeth (2010) defines Basel III as an extensive set of measures reformed in order to enhance the regulation, supervision and risk management in terms of banking. This report mentions new methods with their strengths, weaknesses and effectiveness to help banks control and measure risks effectively, especially combination of credit and market risks. They are incremental risk charge (IRC), credit valuation adjustment (CVA) and stresses value at risk (VAR) model. II. Incremental Risk Charge – IRC 1. Strengths of Incremental Risk Charge Model In order to avoid crisis, banks must satisfy capital requirement demanded by Basel Committee to cover individual as well as correlated risks. IRC is a method which helps banks to estimate minimum capital needed to cover risks from unsecuritised credit instruments caused by default and migration events (BCBS, 2009b). It means IRC model calculates the maximum risks in the worst case when banks cannot securitise any products. As a result, banks have to set up the suitable capital for their own business and make sure that they can overcome difficulties even in the worst situation. In other words, banks will be safe from default and migration events, and more importantly, they can avoid crisis by using IRC model. In Basel III, with IRC model, risks can be measured for a one-year capital horizon at 99.9% confidence level, instead of a 10-day VAR at the 99% confidence level as in Basel II (Davidson, 2009). The extension of capital horizon is one of IRC’s strengths because it can evaluate and calculate  banks’ risks more effectively and accurately than 10-day VAR. The reason is one-day or 10-day VAR cannot comprise completely large cumulative price variation occurring several weeks or months as well as large daily losses which only happen two or three times per year (BCBS, 2009b). As a result, one-year horizon is the optimal time for banks to rebalance their capital. 2. Weaknesses of Incremental Risk Charge Model Under BCBS’s approval, banks are expected to improve their own IRC models to calculate risks for individual positions or sets of positions (BCBS, 2009b). It means the Committee hopes banks will have their own choice of liquidity horizon which is appropriate with their business without any issued industry benchmarks or standards (Stretton, 2011). However, it leads to inconsistence within banking system. Furthermore, supervisors have to face with more difficulties in process of evaluating banks’ IRC model. Although IRC helps bank to capture risks more effectively, especially when market and credit risks collide, there is a significant weakness still be existing. It is the overlap of counterparty credit risk cooperated with over the counters (OTC) and repo-style transactions between IRC and CVA (Stretton, 2011). As a consequence, it will lead to duplicate capital charge for the banks. Suggested by Linsz (2010) – the corporate Treasurer of Bank of America, the Committee should apply an integrated approach to combine the overlapping risks by deleting the risk above in IRC model, hence build up more accurate capital charge for banks. In fact, Bank of America thinks duplicated capital charge is inappropriate with risk management practices (Linsz, 2010). 3. Effectiveness of Incremental Risk Charge Model According to BCBS (2009b), IRC model mainly compounds two types of risks: default risk and credit migration risk. The origin of default risks can be obligors’ default and/or default events. As a result, it may lead to direct losses and/or indirect losses respectively. Meanwhile, credit migration risks may come from internal or external rating downgrade or upgrade as well as credit migration events (BCBS, 2009b). A study by Kealhofer et al. (1998) and Kealhofer (2003) (cited in Varotto,  2011), there are two main methods applied to rate company’s performance which are Through The Cycle (TTC) rating and Point In Time (PIT) rating. Both two rating methods are used to evaluate repay ability of a business, thus bank sets up its own capital to cover risks in case of the business’s default. Nevertheless, there are several differences between TTC and PIT ratings are as follows. While TTC rating tries to achieve stable rating which is not influenced by economic variation over mid-term or long-term, PIT rating reflects changes of the market as well as credit migration through the credit rating in a short-term. A study by Benford and Nier (2007) found that banks prefer to use PIT rating because it can update market variations and reflect them through enterprise’s credit rating downgrade or upgrade more effectively. In other words, IRC model which is used to estimate capital requi rement for banks based on their risks is influenced by both credit and market risks. III. Credit Valuation Adjustment (CVA) 1. Strengths of Credit Valuation Adjustment A capital charge for credit valuation adjustment (CVA) is a procedure used to calculate capital requirement for mark to market losses associated with counterparties’ decreased creditworthiness (BCBS, 2011b). Compare with the traditional method, CVA is more dynamic because it allows a bank or a financial institution to have trading opportunities with large exposures that excel limits set up to oppose future risks – the thing that the traditional method does not permit (Algorithmics, 2009). In fact, based on high risk, high return theory, banks have chance to increase their profit by the trading opportunities as above. Therefore, applying CVA approach instead of the traditional one may help banks achieve much profit. 2. Weaknesses of Credit Valuation Adjustment When banks apply CVA approach, they have to face with a difficulty which is seen as weakness of CVA. It is banks cannot identify and evaluate counterparty’s credit rating accurately (Cameron, 2011). One of the reasons of this disadvantage is derivatives which are originally purchased between bank and counterparty can be transferred to the third party, then fourth party and so on†¦ As a consequence, the bank cannot control its  counterparties effectively, thus it will lead to bank’s incorrect rating counterparty. Another reason might be mistakes of rating agencies because they do not have enough information about banks’ counterparty. Therefore, it will cause inaccurate risk measure when applying CVA approach. In addition, a report undertaken in this area (Cameron, 2011) shows that there are some participants found CVA’s structuring is sophisticated to apply in several real situations. The dealer proves that there still be existing a lot of pitfalls and problems through the calculating risk process. As a consequence, it might lead to many difficulties for banks in using CVA. 3. Effectiveness of Credit Valuation Adjustment A study by Barus et al. (2010) found that CVA approach uses one-year market risk horizon instead of 10-day. It is the same horizon with model as well as VAR models; therefore it helps banks manage risks easier based on integrated time horizon between risks controlling models. In addition, BCBS (2011b) states that CVA capital charge includes charge for mark to market losses and counterparty’s devaluation in creditworthiness. If banks purchase securities at current time, then their market price decreases, banks will take an expenditure called mark to market losses. CVA captures these risks above means it covers market risk might occur to the banks. In fact, within the last crisis, only one-third of counterparty credit risks were due to actual defaults while the remaining two-thirds caused by CVA losses, especially mark-to-market losses (Goeth, 2010). As mentioned above, CVA also captures risk of counterparty’s devaluation in creditworthiness. According to BCBS (2011a), creditworthiness mentions ability to repay or meet debt obligation of an individual or an enterprise. Therefore, when the counterparty’s repay ability deteriorates, it will lead to increasing of CVA capital charge for banks (Bushnell, 2007) in order to help banks prepare an adequate capital. Put differently, CVA not only captures market risks but also cover credit risks that banks have to face with. As a result, CVA and IRC model associate and support each other to help banks measure and manage combination of market and credit risks more  completely effectively. IV. Stressed VAR 1. Strengths of Stressed VAR Model According to Butler (1999), VAR is defined as calculation used to measure â€Å"the worst expected loss that an institution can suffer over a given time interval under normal market conditions at a given confidence level.† After the crisis in the year 2007, Basel Committee realised that market condition is not always consistent. Therefore, stressed VAR was created to compute VAR which would be performed on the present portfolio of a bank in case that the related market elements were going through a stressed period (BCBS, 2009a). Based on VAR calculated, banks are required to have an appropriate amount of capital to cover their worst expected loss. One of VAR charge’s strengths is it reduces the pro-cyclical capital which are disadvantages for the banks. As stated by Christopher Finger (cited in Pengelly, 2011), recent data used for calculating VAR moved around and around, and it might lead to bad aggregation of more volatile markets, dealers’ losses and enlarged capital. 2. Weaknesses of Stressed VAR Model The weaknesses that can be easily seen in stressed VAR model is stressed VAR cannot capture migration and default risks of banks. That is the reason why banks also have to apply IRC model to capture these risks. Furthermore, stressed VAR also cannot cover mark-to-market losses which need to be measured by CVA approach. Therefore, banks have to cope with more complexity in risk measure; as a consequence, banks can make more mistakes in calculating risk process. One more important point is stressed VAR is not able to measure risk in a normal market condition, thus banks need to use one more different model – normal VAR calculation to measure this type of risk. Consequently, it will require really careful and complicated risk management system in order to measure risk accurately. 3. Effectiveness of Stressed VAR Model In accordance with BCBS (2011c), the effectiveness of stressed VAR model is performed through it can include all risks, for instance interest rate risk,  commodity risk, etc. over a period of stressed market that banks recently experienced. In other words, the more types of risks stressed VAR can cover, the more accurately banks can measure and manage risks. From the stressed VAR’s definition mentioned above, BCBS suggested that â€Å"it should be based on the 10-day, 99th percentile, one-tailed confidence interval VAR measure of the current portfolio, with model inputs calibrated to historical data from a continuous 12-month period of significant financial stress relevant to the bank’s portfolio.† It means stressed VAR uses the same time horizon with IRC and CVA in order to help banks reduce mistakes in risk calculating process due to united horizon. Concurrently, the same time horizon also assists supervisors to revise banks’ risks more effectively. Besides, in order to set up an effective risk management method, banks have to use time-series data of 12-continuous-month for stressed VAR model that includes financial stress event which is relevant to banks’ portfolio (BCBS, 2011c). As a result, the financial crisis from 2007 to 2009 is the time period suggested by the Committee to banks to be used for building stressed VAR model. V. Conclusion In Basel III, three new methods above – Incremental Risk Charge, Capital Valuation Adjustment and Stressed Value at Risk – are concurrently used by the banks and they support each other to measure and manage risks more effectively. Strengths of one method are supplementary for others’ weaknesses. That is the reason why banks are required by Basel Committee to add both of three methods into their risk management. With normal VAR model, IRC, CVA and stressed VAR approaches help banks not only control risks as individual factors but also measure and manage risks as a combination, especially the aggregation of credit and market risks more efficiently. From that, banks need to set up their own capital which is appropriate with their financial situation in order to face with difficulties that the financial crisis 2007-2009 was the typical example. Besides undeniable advantages of three new rules, the largest banks in the world, such as Bank of America, UBS, Royal Bank of Scotland, still found  significant weaknesses and gave comment on the Basel Committee on Banking Supervision’s consultative documents. Basel Committee should concern about these recommendations to readjust Basel III in order to set up an accurate and effective regulation documents for international banks to help banks in particular as well as financial institutions in general avoid disasters as the financial crisis happened in 2007 to 2009. VI. References Algorithmics, (2009) Credit Value Adjustment and the changing environment for pricing and managing counterparty risk. [Online]. Available at: http://www.algorithmics.com/EN/media/pdfs/Algo-WP1209-CVASurvey.pdf (Accessed: 02 January 2012) Barus, R., Battaglia, F., Jagannathan, R., Mendis, J., and Onorato, M., (2010) Basel III: What’s new? Business and technological challenges. [Online]. Available at: http://www.algorithmics.com/en/media/pdfs/algo-wp0910-lr-basel3-exd.pdf (Accessed: 02 January 2012) Basel Committee on Banking Supervision, (2009a) Analysis of the trading book quantitative impact study. Bank for International Settlements. Basel. Basel Committee on Banking Supervision, (2009b) Guidelines for computing capital for incremental risk in the trading book. Bank for International Settlements. Basel. Basel Committee on Banking Supervision, (2011a) Application of own credit risk adjustments to derivatives. Bank for International Settlements. Basel. Basel Committee on Banking Supervision, (2011b) Basel III: A global regulatory framework for more resilient banks and banking systems. Bank for International Settlements. Basel. Basel Committee on Banking Supervision, (2011c) Interpretive issues with respect to the revisions to the market risk framework. Bank for International Settlements. Basel. Benford, J. & Nier, E. (2007) Monitoring cyclicality of Basel II capital requirements. [Online]. Available at: http://www.bankofengland.co.uk/publications/fsr/fs_paper03.pdf (Accessed: 28 December 2011) Bushnell, C. D. (2007) Detailed Comments on Market Risk NPR’. [Online]. Available at: http://www.federalreserve.gov/SECRS/2007/February/20070213/R-1266/R-1266_17_1.pdf (Accessed: 06 January 2012) Butler, C. (1999) Mastering value at risk: a step-by-step guide to understanding and applying VAR. London: Financial Times/Prentice Hall. Cameron, M. (2011) ‘Securitising CVA’, Risk, 24(2), p. 29. Davidson, C. (2009) ‘Urgency and uncertainty’, Risk, 22(4), p. 72. Ferry, J. (2008) ‘Wary of the IRC’, Risk, 21(9), p. 26. Goeth, P. (2010) Basel III – Design and Potential Impact. [Online]. Available at: http://www.garp.org/media/529782/basel%20iii_goeth112410.pdf (Accessed: 28 December 2011) Hull, C. J. (2010) Risk management and financial institutions. Boston, MA Harlow: Pearson Education. Linsz, D. M. (2010) Basel Committee on Banking Supervision, Consultative Document â€Å"Strengthening the Resilient of Banking Sector†. [Online]. Available at: http://www.bis.org/publ/bcbs165/boac.pdf (Accessed: 28 December 2011) Madigan, P. (2010) When market and credit risk collide. [Online]. Available at: Available at: http://www.risk.net/risk-magazine/feature/1652766/when-market-credit-risk-collide (Accessed: 03 January 2012) Pengelly, M. (2011) Stressed VAR questioned by risk managers. [Online]. Available at: http://webcache.googleusercontent.com/search?q=cache:8Hl5fareW-UJ:www.risk.net/risk-magazine/news/2024562/stressed-var-questioned-risk-managers+Stressed+VAR+questioned+by+risk+managers&cd=1&hl=en&ct=clnk&gl=uk (Accessed: 28 December 2011)

Kimi Dora

Blog Number One â€Å"Oh, You are so Funny and I’m Love it† By: Kenneth Esteleydiz de Guzman (Submitted for an Essay Class in DLSUD) I know that you have already watched a lot of funny films around. But one thing you shouldn’t miss is the movie directed by Ms. Joyce Bernal, and was produced by Spring Films. This movie will surely make you giggle and laugh so hard! I swear to you that every minute that you will spend in this film will never make you feel doubtful and regretful for the fact that this is really worth watching. I’ll tell you now the title of this movie.My much loved movie ever for this year is â€Å"Kimy Dora†, starring Eugene Domingo. Kimy Dora is a film that is about twins who are identical. Kimy Go Dong Hae is the older of the two, she was not that smart when she was young but suddenly after she got a typhoid fever (a very high and severe fever), and she became really smart! It was like she ate a dictionary! Doctors said that her bra in could have been affected by the severe illness she had. She became a war freak as well. She is also insecure for having less attention from her dad and from her very much loved man, Johnson (played by Dingdong Dantes) who admires Dora a lot.Dora (Kimmy’s twin sister) on the other side isn’t so smart but not so dumb as well. Dora may be compared to those who are mentally challenged because of the way she acts; this happened because she was born inside a toilet bowl and got her head bumped inside it when she came out from her mother’s womb. Her parents thought that they would only have one daughter who was Kimy but what happened was that when their mom was a I know that you have already watched a lot of funny films around. But one thing you shouldn’t miss is the movie directed by Ms. Joyce Bernal, and was produced by Spring Films.This movie will surely make you giggle and laugh so hard! I swear to you that every minute that you will spend in this film wi ll never make you feel doubtful and regretful for the fact that this is really worth watching. I’ll tell you now the title of this movie. My much loved movie ever for this year is â€Å"Kimy Dora†, starring Eugene Domingo. Kimy Dora is a film that is about twins who are identical. Kimy Go Dong Hae is the older of the two, she was not that smart when she was young but suddenly after she got a typhoid fever (a very high and severe fever), and she became really smart!It was like she ate a dictionary! Doctors said that her brain could have been affected by the severe illness she had. She became a war freak as well. She is also insecure for having less attention from her dad and from her very much loved man, Johnson (played by Dingdong Dantes) who admires Dora a lot. Dora (Kimmy’s twin sister) on the other side isn’t so smart but not so dumb as well. Dora may be compared to those who are mentally challenged because of the way she acts; this happened because sh e was born inside a toilet bowl and got her hea bout to poop in a toilet bowl, and it was Dora who came out!Their mom died due to severe bleeding and shame due to what happened. Knowing the fact that Dora is a bit mentally challenged, Kimy hated her so much. But one thing that proved that Dora was not retarded was when Kimy was kidnapped; she was able to take over of their company even though Dora only pretended as Kimy to make sure that people won’t panic for the lost of Kimy. At the end of the film, Dora and Kimy were able to be good sisters again and Kimy realized that she shouldn’t mistreat her sister as to what she usually did before.The reason why I really love this film is that Eugene Domingo is also one of my favorite comedians. She has that kind that of humor that would make me burst out. This was the first movie wherein she got the major role and the great thing is that she got the best actress award for this movie. Another reason is that the movie also has m oral lessons, lessons that would surely make your heart cry. I bet you should really watch this movie not just for fun but for simple lessons as well. Just go and grab a copy of this now and be astonished of the laughter that this movie might bring to you.