Relevant:
- How (And Why) Banks Increased Total Outstanding Derivatives By A Record $107 Trillion In 6 Months
- Bailed Out Citigroup Is Going Full Throttle into Derivatives that Blew Up AIG
- Banks Lose $836 Million in First Annual Loss in Derivatives
- The CBO's Bad Math: Putting $7 Trillion of Notional Value of Derivatives in Taxpayer-Backstopped Depositaries Will Cost Zero
- The Fed Sends a Frightening Letter to JPMorgan and Corporate Media Yawns
2012-04-18 — seekingalpha.com
In fact, the total amount of derivatives cannot be accurately presented in any other form but gross notional obligations. The risk to society cannot be judged in any other way. That's why the FDIC, US Comptroller of the Currency and the Bank for International Settlement (BIS) all use gross notional.
Final net obligations can only be determined when and if derivatives are triggered. The net can be significantly lower, but neither we, nor the banks themselves actually know exactly what that is. It depends upon the balance sheets of every counter-party, and the extent to which interest rates will change in the future. Not even the banks have full information about either topic.
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