A Nuanced Perspective on Risk in the Age of COVID-19
July 23, 2020
In a fast changing economic environment, the very definition of default is changing. Central Bank led stimulus programs may be able to mask a troubled sector in the short term. In addition, only when a payment is past due by 90 days, we have to determine the Exposure at Default (EAD) for a given Counterparty. However, if Liquidity dries up, there can be dire consequences for a financial institution.