Basel III

From ACT Wiki
Jump to navigationJump to search

Bank supervision.

Basel III is third amended and strengthened international bank capital adequacy framework issued in 2010 and updated in 2011, designed to improve on Basel II.

Basel III leverage ratio framework and disclosure requirements were issued in January 2014.

Among other reforms, Basel III aims to reduce moral hazard and the related 'too big to fail' problem.

It also places substantially greater emphasis on harmonised liquidity and funding risk standards.

Basel III has been implemented in the European Union on a phased basis under its Capital Requirements Directives IV and V (CRD IV and CRD V).

Important changes introduced by Basel III include:

  • Significant increases in requirements for the quality and amounts of capital;
  • Capital buffers;
  • The Leverage Ratio;
  • The Liquidity Coverage Ratio and Net Stable Funding Ratio.

Basel III is sometimes written Basel 3.

Further elements of the Basel III framework were agreed in December 2017. These further elements are sometimes known as Basel IV.

They will be implemented by the sixth Capital Requirements Directive (CRD VI or CRD 6) and the third Capital Requirements Regulation (CRR III or CRR 3).

See also

Other links

Basel III leverage ratio framework and disclosure requirements January 2014