The mathematical framework underlying the “scenarios" approach for derivate transactions by Italian local Authorities

"\"On September, 2009 the Italian Ministry of Economy and Finance issued a proposal for the. regulation of derivatives contracts that Italian local Authorities are allowed to subscribe. The proposal. outlines the information that should be provided in the contracts in order to assure an appropriate. level of disclosure. Moreover, the proposal has introduced an approach based on so-called \"scenarios\". which are used to compare the effectiveness of the use of derivatives.. We have analysed the mathematical framework underlying the above \"scenarios\" approach, showing. that it is suited to treat - in a mathematical consistent way - the comparison between the original. liability and the liability after the subscription of the derivative only for a very particular set of cases.\""