Comment by hotpockets
3 years ago
I am interested in this, but already confused on page 1. The book describes a bank needing to borrow swiss francs, but that doesn't make sense to me. Why not just borrow the money in their native currency? Does the book ever go into this?
If you borrow in a different currency than your assets then you introduce currency risk. For example, if I make a loan of 100 CAD by borrowing 100 USD, then when the loan finishes I might only be able to convert 100 CAD to 50 USD.