Basel III: Finalising post-crisis reforms.
Note: This standard has been integrated into the consolidated Basel Framework.
The BaselIII framework is a central element of the Basel Committee's response to the global financial crisis. It addresses shortcomings of the pre-crisis regulatory framework and provides a regulatory foundation for a resilient banking system that supports the real economy.
A key objective of the revisions incorporated into the framework is to reduce excessive variability of risk-weighted assets (RWA). At the peak of the global financial crisis, a wide range of stakeholders lost faith in banks' reported risk-weighted capital ratios. The Committee's own empirical analyses also highlighted a worrying degree of variability in banks' calculation of RWA. The revisions to the regulatory framework will help restore credibility in the calculation of RWA by:
- enhancing the robustness and risk sensitivity of the standardised approaches for credit risk and operational risk, which will facilitate the comparability of banks' capital ratios
- constraining the use of internally modelled approaches
- complementing the risk-weighted capital ratio with a finalised leverage ratio and a revised and robust capital floor
An accompanying document summarises the main features of these revisions.
For more information on the Basel III reforms, see the Basel III webpage.
- Publication Date: December 2017
- Publication Type: Standards
- Publication Status: Consolidated
- Publication Category: Credit Risk
- Number of Pages: 162
- Keywords: Leverage Ratio, Operational Risk, Risk-weighted asset, Basel III, Credit Risk, Credit Valuation Adjustment
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