The dollar dominance dispute

Disputes over the valuation of collateralised derivatives trades have pushed the industry to develop a new standard credit support annex. A solution has been proposed – but some Asian banks have raised concerns about the dominant role given to the US dollar in the new framework. Are their concerns justified?

No one thought the push to a new standard credit support annex (CSA) would be effortless. But with an implementation plan approved by the International Swaps and Derivatives Association board just a few months ago, and with some firms eyeing a second-quarter 2012 roll-out, it may have seemed most of the heavy lifting had been done. That view now seems a little hasty. Some banks – particularly those in Asia-Pacific – are apprehensive about the perceived dominance of the US dollar in the new