BCBS D424

From Open Risk Manual

Definition

BCBS D424 is a document published by the Basel Committee on Banking Supervision on December 2017 in the Credit Risk category.

Title

Basel III: Finalising post-crisis reforms.

Abstract

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.

Document Profile

See Also

Disclaimers

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