The paper also outlines a number of principles for use by supervisory authorities when evaluating banks' interest rate risk management. This paper strongly endorses the principle that banks’ internal measurement systems should, wherever possible, form the foundation of the supervisory authorities’ measurement of and response to the level of interest rate risk. It provides guidance to help supervisors assess whether internal measurement systems are adequate for this purpose, and also provides an example of a possible framework for obtaining information on interest rate risk in the banking book in the event that the internal measurement system is not judged to be adequate
