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Basel III: Finalising post-crisis reforms, sometimes called the Basel III Endgame in the United States, [1] [2] Basel 3.1 in the United Kingdom, [3] or CRR3 in the European Union, [4] are additional changes to international standards for bank capital requirements that were agreed by the Basel Committee on Banking Supervision (BCBS) in 2017 as part of Basel III, first published in 2010.
Despite the consistent criticism, proponents of the Basel III Endgame proposal believe it will help make the banking system more resilient and prevent worst-case scenarios. They note B3E will ...
The so-called Basel III Endgame rules would overhaul how banks with more than $100 billion in assets manage their capital, potentially crimping their lending and trading. Banks say extra capital ...
Basel III requires banks to have a minimum CET1 ratio (Common Tier 1 capital divided by risk-weighted assets (RWAs)) at all times of: . 4.5%; Plus: A mandatory "capital conservation buffer" or "stress capital buffer requirement", equivalent to at least 2.5% of risk-weighted assets, but could be higher based on results from stress tests, as determined by national regulators.
The draft Basel rule, first unveiled in July 2023, overhauls how banks with more than $100 billion in assets calculate the amount of capital they must put aside to absorb potential losses.
The focus of the Basel III guidance is to increase bank capital requirements and to introduce capital surcharges for G-SIFIs. [6] However, some economists warned in 2012 that the tighter Basel III capital regulation, which is primarily based on risk-weighted assets, may further negatively affect the stability of the financial system. [7] [8]
The capital regulation plan known as Basel III Endgame will increase capital requirements by 20% or more for the eight largest U.S. banks.
This was called Basel I, and the Committee came out with a revised framework known as Basel II. The main recommendation of this document is that banks should hold enough capital to equal at least 8% of its risk-weighted assets. [5] More recently, the committee has published another revised framework known as Basel III. [6]