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DVA: BIS Stands Firm on Stance on DVA
The Basel Committee’s final ruling on the treatment of valuation adjustments to liabilities are out, and they reaffirm the derecognition from Tier 1 capital of changes in DVA.
“…the Committee believes that valuation adjustments to derivative liabilities raise a wide range of prudential concerns, and therefore that conservatism should drive the policy framework in this area. In addition, the Committee believes that it is currently not feasible to implement alternative approaches in a consistent and sufficiently robust manner.”