Methods of interest rate risk management

Interest rate risk management is an important element of asset-liability management in Western commercial banks, and is the main tool for increasing the bank's operating income and stabilizing the bank's market value.

Interest rate risk management is an important part of commercial banks to realize risk management. On the basis of interest rate forecasting and interest rate risk measurement, there are two main types of interest rate risk management:

One type is the traditional on-balance sheet management method, which achieves the purpose of controlling interest rate risk by increasing (or decreasing) the position of assets or liabilities, or changing the internal structure of assets or liabilities (e.g., constructing an immune asset portfolio);

The other type is the off-balance sheet management method, which mainly

The other type is the off-balance sheet management method, mainly for the temporary preservation of the existing asset and liability positions, as well as for the individual risk is larger, or difficult to be included in the interest rate risk measurement system of the commercial bank of a certain asset or liability business, through the financial derivatives and other off-balance sheet purpose of the arrangement for hedging it.