The paper examines initial effects from the negative interest rate on the
excess reserves of the banks in Bulgaria implemented by the Bulgarian National
Bank in the beginning of 2016. The research covers the effects on the interest rates
on the interbank money market and briefly discusses the liquidity management in
the banking system by transforming banks’ cash equivalents in other types of assets
(financial instruments, loans, for example). Conclusions and proposals are made,
concerning the meaning of the negative interest rate for the change and the dynamics
of the interest rates on deposits and loans and the profitability of the banks in Bulgaria.
The aim of this paper is to express hedging of interest rate risk and its
problems with consequences in using of hedge accounting under accounting standard
IAS 39 by insurance company. This paper focuses especially on hedge accounting
problem connected with long duration of negative market interest rates. At first, the
paper focuses on market risks and in detail on explanation of the interest rate risk.
Then paper focuses on hedge accounting under IAS 39 and its principles generally.
Then paper focuses on the efficiency testing of the interest rate gap by cash flow
hedging and its problem during long duration of negative market interest rates. Efficiency testing is showed on practical example of hedging interest rate gap of the
insurance company in the period of negative interest rates. This paper focuses on
assessment of hedging efficiency and abstract away from inefficiency calculation.