# Mark-to-funding approach

- Canonical URL: https://www.gerhardmerk.de/mark-to-funding-approach
- Post ID: 594449
- Modified: 2023-07-25T21:01:33+00:00
- Language: en

## Definition

Accounting approach that makes the valuation of risk positions at a bank dependent on whether the corresponding items are funded in the short term, medium term or long term. Regardless of how long an institution wishes to hold a risk position on its books, under this proposal the risk position would always be valued at market price if it was refinanced in the short term. If, however, a risk position is refinanced on a long-term basis - for example, by issuing a long-term bond - then it could be placed on the balance sheet at a value that takes into account the expected future cash flows of the position. In this case, the valuation would be independent of temporary price fluctuations on the financial market. - In the course of the financial crisis that followed the subprime crisis, this so-called Geneva model (the proposals originate mainly from the International Centre for Monetary and Banking Studies in Geneva) was widely discussed. - See mark-to-market approach, procyclicality. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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