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Basel III rules text and results of the quantitative impact study QIS issued by the Basel Committee

 

This is the Basel III / CRDIV rules & stipulations page

 

there are 2 related TAGs or TOPICs on asymptotix (collections of pieces by subject)

BASEL3 & CRD4

 

Banks across the world will need to raise nearly €600 billion ($793 billion) in extra capital as a result of new rules designed to prevent another global financial crisis, the Bank for International Settlement said Thursday.

The Riksbank: Basel III - tougher rules for banks

The Basel Committee recently presented a new regulatory framework for banks, the so-called Basel III. Essentially, it covers new and tougher rules for capital and liquidity in the banking sector. These more stringent rules are aimed at strengthening banks’ capacity to absorb risks and reduce the risk of new banking crises arising in the future. This box presents Basel III, together with the findings of two studies regarding the macroeconomic consequences of the more stringent regulations. The new regulations entail that the banks must maintain more and considerably better capital and that rules covering banks’ liquidity will be introduced. The main message of this box is that the Swedish banks are well-capitalised and are already complying with the new regulatory framework, in all essentials. Consequently, the implications of the new regulations for both the macroeconomy and monetary policy in Sweden will be minor.

The financial crisis exposed a series of shortcomings in existing regulations and in the supervision of thefinancial sector, as well as in financial companies’ ability to bear and manage risks. Above all, this was a matter of the banks having neither sufficient high-quality capital to cover the losses in their operations nor sufficiently extensive liquidity buffers to manage their funding in a period in which confidence in the banks was being questioned and several financial markets had collapsed. In addition, supervision and regulation previously paid too little attention to systemic risks. This means that supervision and regulation were excessively focused on ensuring that individual financial companies were sufficiently capitalised and resilient. However, this was not enough to capture the overall risks that had built up in the system as a whole. In September 2009, the Basel Committee therefore initiated extensive efforts to strengthen capital requirements for banks, to introduce minimum liquidity requirements for banks, and to formulate new regulatory tools to manage systemic risks. The Basel Committee on Banking Supervision is a committee under the Bank for International Settlements (BIS) which, among other tasks, develops international standards for the regulation and supervision of banks. The BIS has no mandate to introduce regulations, but coordinates the regulatory frameworks of the 27 participating countries, including Sweden.

Basel III, what is currently being implemented?

In September of this year, the Basel Committee reached agreement on the principles by which the new, more stringent minimum regulations for banks’ liquidity should be formulated, as well as a timetable for the introduction of the new regulations. The new regulations will be phased in gradually. The new, more stringent capital requirements will be introduced successively, starting in January 2013, and are to have been fully introduced by January 2019. The start of the introduction of the liquidity regulations is planned for 2015, and these are to have been fully introduced by 2018.

IMPOSING A SYSTEMIC RISK CHARGE: the Issing Commission

Criteria for a workable approach towards bank levies and bank restructuring

Otmar Issing (Chairman), Jan Pieter Krahnen, Klaus Regling, William White

link

Martin Baxter - Counterparty Credit Risk - SFRA Scottish Financial Risk Academy presentation

Martin Baxter, Nomura International, presented Counterparty Credit Risk at the Scottish Financial Risk Academy (SFRA) Inaugural Colloquium in Edinburgh on the 4 November 2010.

BIS - Joint Forum recommends improvements in risk aggregation models

The report suggests improvements to the current modelling techniques used by complex firms to aggregate risks. It also examines supervisory approaches to firms' use of risk aggregation models, particularly in light of the global financial crisis.

 

Mr Tony D'Aloisio, Chairman of the Joint Forum and Chairman of the Australian Securities and Investments Commission, said "This report is essential reading for firms considering ways to make more effective use of risk aggregation methods, and for supervisors wanting to understand firms' use of risk aggregation models to help identify shortcomings in a firm's approach."

The Business Cycle and Basel III

I have been reading an interesting synopsis of Basel 3 this week. I noted this analytic of Basle III in relation to what asymptotix has been publishing about Ben Bernanke yesterday; 

Monetary Policy Objectives and Tools in a Low-Inflation Environment 

European lawmakers are urging European Union policymakers in Brussels to fine-tune the new Basel III rules on bank capital

European lawmakers are urging European Union policymakers in Brussels to “fine-tune” the new Basel rules on bank capital, which were agreed internationally last month, when applying them to EU institutions. The Basel III framework was hammered out by the Basel Committee on Banking Supervision, the global rule-making body, in September, and the new standards are seen as one of the most important regulatory reforms since the financial crisis. They will be implemented in Europe via a legislative package known as CRD IV, which the European Commission will propose either later this year or early in 2011. That will require approval from both the EU’s 27 member states and the European Parliament.

Official BIS: Group of Governors and Heads of Supervision announces higher global minimum capital standards Basel III

 

HEALTH WARNING : THIS MAY REQUIRE THE ADOBE PDF FACILITY,

IT DOES GO ON A BIT; BUT IS NEVERTHELESS WORTH IT

 

At its 12 September 2010 meeting, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, announced a substantial strengthening of existing capital requirements and fully endorsed the agreements it reached on 26 July 2010. These capital reforms, together with the introduction of a global liquidity standard, deliver on the core of the global financial reform agenda and will be presented to the Seoul G20 Leaders summit in November.

The Committee's package of reforms will increase the minimum common equity requirement from 2% to 4.5%. In addition, banks will be required to hold a capital conservation buffer of 2.5% to withstand future periods of stress bringing the total common equity requirements to 7%. This reinforces the stronger definition of capital agreed by Governors and Heads of Supervision in July and the higher capital requirements for trading, derivative and securitisation activities to be introduced at the end of 2011.

BarCap on Basel III and “tier one” equity capital

Big US banks should be able to meet tighter global capital requirements without having to raise substantial amounts of new equity, according to calculations by Barclays Capital.

The analysis by BarCap’s debt capital markets group estimates that the 35 largest US banks will have to come up with half as much new capital as had been expected following last month’s rewrite of proposed requirements by the Basel Committee on Banking Supervision

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