Basel III - Knowledge

1730:(IIF, a Washington, D.C.–based, 450-member banking trade association), argued against the implementation of the accords, claiming it would hurt banks and economic growth. The American Banker's Association, community banks organized in the Independent Community Bankers of America, and some of the most liberal Democrats in the U.S. Congress, including the entire Maryland congressional delegation with Democratic Sens. Cardin and Mikulski and Reps. Van Hollen and Cummings, voiced opposition to Basel III in their comments submitted to FDIC, saying that the Basel III proposals, if implemented, would hurt small banks by increasing "their capital holdings dramatically on mortgage and small business loans." 1311:"Early remediation requirements" to ensure that "financial weaknesses are addressed at an early stage". One or more "triggers for remediation—such as capital levels, stress test results, and risk-management weaknesses—in some cases calibrated to be forward-looking" would be proposed by the Board in 2012. "Required actions would vary based on the severity of the situation, but could include restrictions on growth, capital distributions, and executive compensation, as well as capital raising or asset sales". 634:(SIFI) banks and 6% for their insured bank holding companies. In the EU, whilst banks have been required to disclose their leverage ratio since 2015, a binding requirement has not yet been implemented. The UK operates its own leverage ratio regime, with a binding minimum requirement for banks with deposits greater than £50bn of 3.25%. This higher minimum reflects the PRA's differing treatment of the leverage ratio, which excludes central bank reserves in 'Total exposure' of the calculation. 3650: 1750: 1990: : << Two years after the start of one of the biggest economic crises to shake the world's financial system, central banks and global supervisors, known as the Basel Supervisory Committee, recently announced stricter capital rules in order to ensure greater solidity for the banking system and prevent future collapses. This is the third edition of their regulatory proposals, embodied in the Basel III Accord. >> 3638: 1318:, the Federal Reserve announced a temporary reduction of the Supplementary Leverage Ratio (applicable to financial institutions with more than $ 250 billion in consolidated assets) from 3% to 2%, effective until 31 March 2021. On 19 March 2021 the Federal Reserve announced that the year-long emergency relief would not be renewed at the end of the month. 949:. The Basel Committee's oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS), announced in December 2017 that the implementation date of these reforms, which were originally set to be effective in 2019, was delayed to 1 January 2022. In March 2020, the implementation date was delayed to 1 January 2023. 1602:. The estimated effects on GDP growth assume no active response from monetary policy. To the extent that monetary policy would no longer be constrained by the zero lower bound, the Basel III impact on economic output could be offset by a reduction (or delayed increase) in monetary policy rates by about 30 to 80 1593:

would be in the range of −0.05% to −0.15% per year. Economic output would be mainly affected by an increase in bank lending spreads, as banks pass a rise in bank funding costs, due to higher capital requirements, to their customers. To meet the capital requirements originally effective in 2015 banks

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Regional firms (those with between $ 50 and $ 250 billion in assets) would be subject to a "modified" LCR at the (BHC) level only. The modified LCR requires the regional firms to hold enough HQLA to cover 21 days of net cash outflow. The net cash outflow parameters are 70% of those applicable to the

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In January 2013 the global banking sector won a significant easing of Basel III rules, when the BCBS extended not only the implementation schedule to 2019, but broadened the definition of liquid assets. In December 2017, the Basel Committee's oversight body, the Group of Central Bank Governors and

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itself would conduct tests annually "using three economic and financial market scenarios". Institutions would be encouraged to use at least five scenarios reflecting improbable events, and especially those considered impossible by management, but no standards apply yet to extreme scenarios. Only a

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Large Bank Holding Companies (BHC) – those with over $ 250 billion in consolidated assets, or more in on-balance sheet foreign exposure, and to systemically important, non-bank financial institutions; to hold enough HQLA to cover 30 days of net cash outflow. That amount would be determined based on

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Basel III was also criticized as negatively affecting the stability of the financial system by increasing incentives of banks to game the regulatory framework. Notwithstanding the enhancement introduced by the Basel III standard, it argued that "markets often fail to discipline large banks to hold

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The ratio is calculated by dividing Tier 1 capital by the bank's leverage exposure. The leverage exposure is the sum of the exposures of all on-balance sheet assets, 'add-ons' for derivative exposures and securities financing transactions (SFTs), and credit conversion factors for off-balance sheet

1665:" status remains with respect to major derivatives dealers who aggressively took on risk of an event they did not believe would happen—but did. As Basel III does not absolutely require extreme scenarios that management flatly rejects to be included in stress testing this remains a vulnerability. 1223:

On 3 September 2014, the U.S. banking agencies (Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation) issued their final rule implementing the Liquidity Coverage Ratio (LCR). The LCR is a short-term liquidity measure intended to ensure that banking

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The United States' LCR proposal came out significantly tougher than BCBS's version, especially for larger bank holding companies. The proposal requires financial institutions and FSOC designated nonbank financial companies to have an adequate stock of high-quality liquid assets (HQLA) that can be

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On 11 March 2016, the Basel Committee on Banking Supervision released the second of three proposals on public disclosure of regulatory metrics and qualitative data by banking institutions. The proposal requires disclosures on market risk to be more granular for both the standardized approach and

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and equity securities and are subject to a 50% haircut. The BCBS and U.S. version treats equities in a similar manner, but corporate debt under the BCBS version is split between 2A and 2B based on public credit ratings, unlike the U.S. proposal. This treatment of corporate debt securities is the

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Lastly, the proposal requires both sets of firms (large bank holding companies and regional firms) subject to the LCR requirements to submit remediation plans to U.S. regulators to address what actions would be taken if the LCR falls below 100% for three or more consecutive days.

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profits), less deductions of accounting reserve that are not believed to be loss absorbing "today", including goodwill and other intangible assets. To prevent the potential of double-counting of capital across the economy, bank's holdings of other bank shares are also deducted.

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have argued that Basel III merely builds on and further expands the existing Basel II regulatory base without fundamentally questioning its core tenets, notably the ever-growing reliance on standardized assessments of "credit risk" marketed by two private sector agencies-

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The proposal requires that the LCR be at least equal to or greater than 1.0 and includes a multiyear transition period that would require: 80% compliance starting 1 January 2015, 90% compliance starting 1 January 2016, and 100% compliance starting 1 January 2017.

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On 15 April 2014, the Basel Committee on Banking Supervision (BCBS) released the final version of its "Supervisory Framework for Measuring and Controlling Large Exposures" (SFLE) that builds on longstanding BCBS guidance on credit exposure concentrations.

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Level 1 represents assets that are highly liquid (generally those risk-weighted at 0% under the Basel III standardized approach for capital) and receive no haircut. Notably, the Fed chose not to include GSE-issued securities in Level 1, despite industry

1680:, who argue that it would "hurt" both their business and overall economic growth. Basel III was also criticized as negatively affecting the stability of the financial system by increasing incentives of banks to game the regulatory framework. The 1189:. (In January 2012, the oversight panel of the Basel Committee on Banking Supervision issued a statement saying that regulators will allow banks to dip below their required liquidity levels, the liquidity coverage ratio, during periods of stress.) 813:

The US proposal divides qualifying HQLAs into three specific categories (Level 1, Level 2A, and Level 2B). Across the categories, the combination of Level 2A and 2B assets cannot exceed 40% HQLA with 2B assets limited to a maximum of 15% of HQLA.

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announced in December 2011 that it would implement substantially all of the Basel III rules. It summarized them as follows, and made clear they would apply not only to banks but also to all institutions with more than US$ 50 billion in assets:

420:, are sometimes referred to as Basel IV. However, the secretary general of the Basel Committee said, in a 2016 speech, that he did not believe the changes are substantial enough to warrant that title and the Basel Committee refer to only three 564:

Basel III introduced a minimum "leverage ratio" from 2018 based on a leverage exposure definition published in 2014. A revised exposure definition and a buffer for globally systemically important banks (G-SIBs) will be effective from 2023.

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has argued that Basel III did not go far enough to regulate banks since, he believed, inadequate regulation was a cause of the global financial crisis and remains an unresolved issue despite the severity of the impact of the

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The LCR consists of two parts: the numerator is the value of HQLA, and the denominator consists of the total net cash outflows over a specified stress period (total expected cash outflows minus total expected cash inflows).

614: 2968: 983:; an output floor; and the leverage ratio. The GHOS announced in March 2020 that the implementation date of these reforms, which were originally set to be effective at the start of 2022, was delayed to 1 January 2023. 1184:

Fifth, a global minimum liquidity standard for internationally active banks is introduced that includes a 30-day liquidity coverage ratio requirement underpinned by a longer-term structural liquidity ratio called the

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Fourth, a series of measures is introduced to promote the buildup of capital buffers in good times that can be drawn upon in periods of stress ("Reducing procyclicality and promoting countercyclical buffers").

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Level 2A assets generally include assets that would be subject to a 20% risk-weighting under Basel III and includes assets such as GSE-issued and -guaranteed securities. These assets would be subject to a 15%

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do not tax or charge institutions for the systematic or aggressive externalization or conflicted marketing of risk—other than requiring an orderly unravelling of derivatives in a crisis and stricter record

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summary of the three official Fed scenarios "including company-specific information, would be made public" but one or more internal company-run stress tests must be run each year with summaries published.

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A few critics argue that capitalization regulation is inherently fruitless due to these and similar problems and—despite an opposite ideological view of regulation—agree that "too big to fail" persists.

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Opaque treatment of all derivatives contracts is also criticized. While institutions have many legitimate ("hedging", "insurance") risk reduction reasons to deal in derivatives, the Basel III accords:

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in November 2010, and was scheduled to be introduced from 2013 until 2015; however, implementation was extended repeatedly to 1 January 2022 and then again until 1 January 2023, in the wake of the

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of a covered financial firm to a single counterparty as a percentage of the firm's regulatory capital. Credit exposure between the largest financial companies would be subject to a tighter limit".

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Initial introduction of the Liquidity Coverage Ratio (LCR), with a 60% requirement. This will increase by ten percentage points each year until 2019. In the EU, 100% will be reached in 2018.

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treat insurance buyers and sellers equally even though sellers take on more concentrated risks (literally purchasing them) which they are then expected to offset correctly without regulation

2805:...the set of international banking rules that have had the single largest impact require banks to hold capital as a buffer against trading losses—rules broadly referred to as Basel III. 1642:. Academics have criticized Basel III for continuing to allow large banks to calculate credit risk using internal models and for setting overall minimum capital requirements too low. 1301: 1258: 2975: 1270: 844: 2222: 2700: 1003:: the predominant form of Tier 1 capital must be common shares and retained earnings. This is subject to prudential deductions, including goodwill and intangible assets. 2758: 1692:, saying that the Basel III proposals, if implemented, would hurt small banks by increasing "their capital holdings dramatically on mortgage and small business loans". 941:, minimum capital requirements for market risk in the trading book will be based on a better calibrated standardised approach or internal model approval (IMA) for an 2644: 3363:"Governors and Heads of Supervision announce deferral of Basel III implementation to increase operational capacity of banks and supervisors to respond to Covid-19" 2346:"Governors and Heads of Supervision announce deferral of Basel III implementation to increase operational capacity of banks and supervisors to respond to Covid-19" 1838:"Governors and Heads of Supervision announce deferral of Basel III implementation to increase operational capacity of banks and supervisors to respond to Covid-19" 555:

buffer" allowing national regulators to require up to an additional 2.5% of RWA as capital during periods of high credit growth. This must be met by CET1 capital.

1283: 2493: 1598:. Capital requirements effective as of 2019 (7% for the common equity ratio, 8.5% for the Tier 1 capital ratio) could increase bank lending spreads by about 50 3715: 3152: 1322:

As of January 2014, the United States has been on track to implement many of the Basel III rules, despite differences in ratio requirements and calculations.

786:(BCBS)'s Liquidity Coverage Ratio (LCR). The ratio would apply to certain U.S. banking organizations and other systemically important financial institutions. 3275: 1246: 569:

items. The ratio acts as a back-stop to the risk-based capital metrics. The banks are expected to maintain a leverage ratio in excess of 3% under Basel III.

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Heads of Supervision (GHOS), extended the implementation of the market risk framework from 2019 to 1 January 2022. In March 2020, implementation of the

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In the United States higher capital requirements resulted in contractions in trading operations and the number of personnel employed on trading floors.

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increases from 4% in Basel II to 6%, applicable in 2015, over RWAs. This 6% is composed of 4.5% of CET1, plus an extra 1.5% of Additional Tier 1 (AT1).

3455: 1305: 579: 3414: 876: 203: 1059:). Currently, the BCBS has stated derivatives cleared with a QCCP will be risk-weighted at 2% (The rule is still yet to be finalized in the U.S.) 3695: 2178: 1208:

As of September 2010, proposed Basel III norms asked for ratios as: 7–9.5% (4.5% + 2.5% (conservation buffer) + 0–2.5% (seasonal buffer)) for

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The original Basel III rule from 2010 required banks to fund themselves with 4.5% of Common Equity Tier 1 (CET1) (up from 2% in Basel II) of

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requires banks to hold sufficient stable funding to exceed the required amount of stable funding over a one-year period of extended stress.

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Since derivatives present major unknowns in a crisis these are seen as major failings by some critics causing several to claim that the "

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For typical mortgage lenders, who underwrite assets of a low risk weighting, the leverage ratio will often be the binding capital metric.

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A mandatory "capital conservation buffer", equivalent to 2.5% of risk-weighted assets, phased in from 2017 and fully effective from 2019.

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Comment Letter on Proposals to Comprehensively Revise the Regulatory Capital Framework for U.S. Banking Organizations(22 October 2012,

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duopolistic practices. The conflicted and unreliable credit ratings of these agencies is generally seen as a major contributor to the

3294: 2142: 3584: 1735: 958: 759:{\displaystyle {\text{NSFR}}={\frac {\text{Available amount of stable funding}}{\text{Required amount of stable funding }}}>100\%} 417: 346: 86: 2457: 695:{\displaystyle {\text{LCR}}={\frac {\text{High quality liquid assets}}{\text{Total net liquidity outflows over 30 days}}}\geq 100\%} 1685: 797:

The Liquidity Coverage Ratio applies to U.S. banking operations with assets of more than $ 10 billion. The proposal would require:

475:(RWAs). Since 2015, a minimum CET1 ratio of 4.5% must be maintained at all times by the bank. This ratio is calculated as follows: 264: 17: 2199: 485: 3162:(Testimony before the Subcommittee on Financial Institutions and Consumer Credit of the U.S. House Financial Services Committee) 1799: 3725: 2117: 938: 932: 783: 413: 402: 230: 81: 46: 3448: 1689: 1622: 2544: 1738:, the market risk framework, and the revised Pillar 3 disclosure requirements were extended by one year, to 1 January 2023. 1967: 3326: 968: 225: 176: 2053: 3690: 1727: 1696: 1673: 1192:

The committee also is reviewing the need for additional capital, liquidity or other supervisory measures to reduce the

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to cover its total net cash outflows over 30 days under a stressed scenario. Mathematically it is expressed as follows:

440:, it introduces requirements on liquid asset holdings and funding stability, thereby seeking to mitigate the risk of a 3255:"Comment Letter on Proposals to Comprehensively Revise the Regulatory Capital Framework for U.S.Banking Organizations" 3685: 3680: 3675: 2254: 3531: 3441: 1052: 1224:

organizations maintain a sufficient pool of liquid assets to cover net cash outflows over a 30-day stress period.

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Smaller BHCs, those under $ 50 billion, would remain subject to the prevailing qualitative supervisory framework.

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of derivative transactions in the leverage exposure measure and non-modelled Risk Weighted Asset calculations.

3208:"Wall Street is Still Out of Control, and Why Obama Should Call for Glass-Steagall and a Breakup of Big Banks" 3186:"Wall Street is Still Out of Control, and Why Obama Should Call for Glass-Steagall and a Breakup of Big Banks" 3150: 1031: 3642: 3279: 2591: 869: 339: 322: 269: 2423:

Tier 3 will be abolished to ensure that market risks are met with the same quality of capital as credit and

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Basel III has been criticized similarly for its paper burden and risk inhibition by banks, organized in the

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Conserve capital to build buffers at individual banks and the banking sector that can be used in stress; and

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Third, a leverage ratio will be introduced as a supplementary measure to the Basel II risk-based framework.

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study, released on 17 February 2011, estimated that the medium-term impact of Basel III implementation on

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The leverage ratio and its components will be tracked by supervisors but not disclosed and not mandatory.

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A framework for limiting large exposure to external and internal counterparties was implemented in 2018.

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The new package, approved in 2013, replaced the Capital Requirements Directives (2006/48 and 2006/49).

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calibration of the risk functions, which convert loss estimates into regulatory capital requirements.

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Ranjit Lall (2012). "From Failure to Failure: The Politics of International Banking Regulation".

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Advocating a change in the accounting standards towards an expected loss (EL) approach (usually,

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by supplementing the risk based measure with a simpler measure that is based on gross exposures.

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larger institutions and do not include the requirement to calculate the peak cumulative outflows

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Samuel A. Vallandingham, on behalf of Independent Community Bankers of America (15 July 2014).

2645:"The Fed will not extend a pandemic-crisis rule that had allowed banks to relax capital levels" 1784:"Group of Governors and Heads of Supervision announces higher global minimum capital standards" 1170: 457: 149: 313: 3567: 3513: 3085: 3028:"Basel III and existing banking rules are inadequate to regulate derivatives, says economist" 2927: 2839: 2440:"Basel II Comprehensive version part 2: The First Pillar – Minimum Capital Requirements" 2388: 2353: 2315: 1916: 1881: 1845: 1355: 1294: 1045: 824: 2153: 991: 3600: 3594: 1150: 627: 379: 3301: 2771: 8: 3464: 2775: 1174: 472: 453: 437: 387: 198: 144: 3257:. Securities Industry and Financial Markets Association. 22 October 2012. Archived from 2015: 1362:

declared that for the banks of the European Union, the Basel III reforms were complete.

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do not require organizations to investigate correlations of all internal risks they own

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The leverage ratio and its components will be tracked and disclosed but not mandatory.

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http://dealbook.nytimes.com/2013/01/07/easing-of-rules-for-banks-acknowledges-reality/

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First, the quality, consistency, and transparency of the capital base will be raised.

851:, and further evidences the conservative bias of U.S. regulators' approach to the LCR. 3013: 2674: 2280: 1639: 1487: 1315: 1264: 832: 406: 371: 3071: 3001: 2913: 2825: 2424: 1974: 1677: 1635: 1337: 1275: 1254: 980: 552: 367: 287: 254: 3418: 3397: 3005: 2953:

M. Nicolas J. Firzli, "A Critique of the Basel Committee on Banking Supervision"

2595: 2149: 2143:"Liquidity Coverage Ratio: Liquidity Risk Measurement, Standards, and Monitoring" 1712: 1704: 1662: 1237: 1124: 441: 128: 115: 110: 1453:

Developing templates to track the leverage ratio and the underlying components.

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Requirement to use long-term data horizons to estimate probabilities of default,

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on prudential requirements for credit institutions and investment firms (CRR).

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and set internal quantitative limits, later moving to a full Basel III regime

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A revised securitisation framework was introduced, which took effect in 2018.

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Capital requirements for equity investments in funds were introduced in 2017.

609:{\displaystyle {\frac {\mbox{Tier 1 Capital}}{\mbox{Total exposure}}}\geq 3\%} 3664: 1720: 1716: 1708: 1209: 1197: 1193: 946: 421: 363: 51: 3153:"Examining Regulatory Relief Proposals for Community Financial Institutions" 3076: 3067: 2918: 2830: 2821: 1873: 1392:

Start of the gradual phasing-in of the higher minimum capital requirements.

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goal of protecting the banking sector from periods of excess credit growth.

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which is similar to the treatment of such securities under the BCBS version.

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The leverage ratio will become a mandatory part of Basel III requirements.

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Promoting stronger provisioning practices (forward-looking provisioning):

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announced that the minimum Basel III leverage ratio would be 5% for eight

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Developing templates and supervisory monitoring of the liquidity ratios.

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Promote more integrated management of market and counterparty credit risk

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Second, the risk coverage of the capital framework will be strengthened.

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Summary of originally-proposed changes (2010) in Basel Committee language

220: 171: 3362: 3339: 2345: 2307: 2200:"Nonbank SIFIs: FSOC proposes initial designations more names to follow" 1837: 1594:

were estimated to increase their lending spreads on average by about 15

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quickly liquidated to meet liquidity needs over a short period of time.

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The "Liquidity Coverage Ratio", which requires banks to hold sufficient

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greater than 5 percent, under both expected and stressed conditions" –

1091: 297: 3392: 3387: 2415: 2111:"Testimony of Hal S. Scott before the Committee on Financial Services" 2088: 2032: 1711:

criticized Basel III for what he characterizes as "more or less remov

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The new standards that come into effect in January 2023, that is, the

374:, and liquidity requirements. Augmenting and superseding parts of the 1688:, and others voiced opposition to Basel III in their comments to the 1009:: supplementary capital, however, the instruments will be harmonised. 964: 3649: 2815: 2813: 3121: 3119: 1695:

Former US Secretary of Labor and Professor of Public Policy at the

820: 433: 375: 61: 2868:"Regulatory Expansion Versus Economic Expansion in Two Recoveries" 2532:. PwC Financial Services Risk and Regulatory Practice. March 2016. 544:

Furthermore, Basel III introduced two additional capital buffers:

3068:"Systemically Important Banks and Capital Regulations Challenges" 2910:"Systemically Important Banks and Capital Regulations Challenges" 2890: 2810: 2482:

Proposed Basel III Guidelines: A Credit Positive for Indian Banks

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Raise counterparty credit risk management standards by including

106: 56: 3116: 2179:"Fed Liquidity Proposal Seen Trading Safety for Costlier Credit" 2033:"Basel III leverage ratio framework and disclosure requirements" 967:

standards published in 2017 cover further reforms in six areas:

3637: 3340:"Governors and Heads of Supervision finalise Basel III reforms" 2740:"Implementing Basel III in Europe - European Banking Authority" 2671:"Federal Reserve to End Emergency Capital Relief for Big Banks" 2308:"Governors and Heads of Supervision finalise Basel III reforms" 1245:"Risk-based capital and leverage requirements" including first 378:

standards, it was developed in response to the deficiencies in

3433: 2518:. PwC Financial Services Regulatory Practice, September, 2014. 1719:, meaning risk does not have an accurate pricing mechanism in 1346:

Directive 2013/36/EU (CRD IV) and Regulation (EU) No. 575/2013

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U.S. Implementation of the Basel Capital Regulatory Framework

3070:. OECD Economics Department Working Papers. OECD Publishing. 2912:. OECD Economics Department Working Papers. OECD Publishing. 2824:. OECD Economics Department Working Papers. OECD Publishing. 2494:"Stress testing: First take: Basel large exposures framework" 1610:

prudent capital levels and make sound investment decisions".

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Dampen excess cyclicality of the minimum capital requirement;

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approved an interagency proposal for the U.S. version of the

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US version of the Basel Liquidity Coverage Ratio requirements

2819: 1789:. Basel Committee on Banking Supervision. 12 September 2010. 1414:

Start of the gradual phasing-in of the conservation buffer.

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Basel III introduced two required liquidity/funding ratios.

515:{\displaystyle {\frac {\mbox{CET1}}{\mbox{RWAs}}}\geq 4.5\%} 3338:

Bank of International Settlements (BIS) (7 December 2017).

2710:. PwC Financial Services Regulatory Practice, January 2014. 2530:"Five key points from Basel's enhanced disclosure proposal" 1586: 1403:

Higher minimum capital requirements are fully implemented.

124: 2778:. MEMO/14/579. 10 October 2014. Retrieved 1 November 2016. 1027:–risk due to deterioration in counterparty's credit rating 883:, became effective in 2017. SA-CCR is used to measure the 436:

regulatory standards for banks. In addition to increasing

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Bank of International Settlements (BIS) (27 March 2020).

2500:. PwC Financial Services Regulatory Practice, April 2014. 366:, a framework that sets international standards for bank 2098:. Basel Committee on Banking Supervision. December 2010. 1812:"Basel III – Implementation - Financial Stability Board" 1676:, an international association of global banks based in 390:

by increasing minimum capital requirements, holdings of

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Securitized Products Risk Charges: Going Beyond on SSFA

2042:. Basel Committee on Banking Supervision. January 2014. 1136:

estimates, recommended in Basel II, to become mandatory

3400:, Springer Nature – Management for Professionals, 2020 590: 585: 536:

CET1 capital comprises shareholders equity (including

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Securities Industry and Financial Markets Association

2761:. Central Banking. Infopro Digital Risk (IP) Limited. 2223:"Liquidity coverage ratio: another brick in the wall" 2137: 2135: 1874:"The global policy reform agenda: completing the job" 1490:

period, any final adjustments to the leverage ratio.

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Strengthen the capital requirements for counterparty

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Basel III aims to strengthen the requirements in the

2722:"Managing risks to banks and financial institutions" 2619:"Fed Trapped by a Covid Exemption for Bank Leverage" 2416:"Strengthening the resilience of the banking sector" 1745: 823:, on the basis that they are not guaranteed by the " 802:

the peak cumulative amount within the 30-day period.

2458:"Bank Regulators to Allow Leeway on Liquidity Rule" 2132: 877:standardised approach for counterparty credit risk 758: 694: 608: 514: 1041:Raise the capital buffers backing these exposures 3662: 2787: 2016:"Basel III transitional arrangements, 2017-2028" 1344:has been the new legislative package comprising 1032:credit exposures arising from banks' derivatives 2790:"In Connecticut, the Twilight of a Trading Hub" 1726:Before the enactment of Basel III in 2011, the 1572: 1055:to qualifying central counterparties (probably 3247: 3065: 2903: 2901: 2886:"Basel rules to have little impact on economy" 2865: 1551:Introduction of the Net Stable Funding Ratio ( 1425:The conservation buffer is fully implemented. 1280:interagency liquidity risk-management guidance 1080:intended to achieve the following objectives: 3716:Systemically important financial institutions 3449: 2759:"Mario Draghi confirms Basel III is complete" 2701:"Basel leverage ratio: No cover for US banks" 2455: 1332:Capital Requirements Regulation and Directive 340: 3429:How Basel III Affects SME Borrowing Capacity 3180: 2542: 2536: 2255:"Fed proposes new liquidity rules for banks" 2108: 847:'s Section 939, which removed references to 632:systemically important financial institution 466: 38:International regulatory standards for banks 2991: 2898: 2381:"Basel III: Finalising post-crisis reforms" 2273:https://www.bis.org/bcbs/publ/d457_note.pdf 1507: 3456: 3442: 3282:respond to Basel III and other regulations 2859: 2545:"Fed Proposes New Capital Rules for Banks" 2194: 2192: 1325: 347: 333: 3075: 2994:Review of International Political Economy 2917: 2829: 2726:European Commission - European Commission 2616: 2021:. Basel Committee on Banking Supervision. 1941: 1939: 1736:Basel III: Finalising post-crisis reforms 1634:, thus using public policy to strengthen 1278:, first based on the United States' own " 959:Basel III: Finalising post-crisis reforms 953:Basel III: Finalising post-crisis reforms 679:Total net liquidity outflows over 30 days 637: 418:Basel III: Finalising post-crisis reforms 2781: 2668: 2572:. Federal Reserve Bank. 20 December 2011 1686:Independent Community Bankers of America 1228:regulatory approval of internal models. 1115:Promote more forward looking provisions; 1090:Introduce additional safeguards against 919:New rules for interest rate risk in the 2820:Patrick Slovik; Boris Cournède (2011). 2750: 2662: 2217: 2215: 2213: 2189: 1580: 1370: 743:Required amount of stable funding 14: 3663: 2907: 2512:"First take: Liquidity coverage ratio" 2118:United States House of Representatives 1936: 1051:Provide additional incentives to move 939:Fundamental Review of the Trading Book 933:Fundamental Review of the Trading Book 784:Basel Committee on Banking Supervision 414:Fundamental Review of the Trading Book 403:Basel Committee on Banking Supervision 47:Basel Committee on Banking Supervision 3696:Great Recession in the United Kingdom 3437: 2883: 2756: 2610: 2340: 2338: 1690:Federal Deposit Insurance Corporation 1062:Provide incentives to strengthen the 969:standardised approach for credit risk 945:measure rather than, under Basel II, 890: 2966: 2866:John B. Taylor (22 September 2012). 2210: 2010: 2008: 2006: 2004: 2002: 2000: 1998: 1871: 1231: 1109:Measures to address procyclicality: 926: 386:. It is intended to strengthen bank 2967:Barr, David G. (23 November 2013). 2822:"Macroeconomic Impact of Basel III" 2642: 2584: 2421:. BCBS. December 2009. p. 15. 2116:. Committee on Financial Services, 1684:, community banks organized in the 1431: 1340:of the Basel III agreements in the 1282:issued in March 2010" that require 154: 24: 3127:"FDIC: Federal Register Citations" 2669:Ackerman, Andrew (19 March 2021). 2617:Chappatta, Brian (10 March 2021). 2335: 1728:Institute of International Finance 1697:University of California, Berkeley 1674:Institute of International Finance 1518:Milestone: Liquidity requirements 1314:In April 2020, in response to the 1012:Tier 3 capital will be eliminated. 906: 898: 864:Counterparty risk: CCPs and SA-CCR 780:Federal Reserve Board of Governors 753: 740:Available amount of stable funding 689: 603: 509: 25: 3742: 3706:Post-2008 Irish economic downturn 3381: 3202: 2974:. Bank of England. Archived from 2788:Nathaniel Popper (23 July 2015). 2757:Hinge, Daniel (7 December 2010). 2543:Edward Wyatt (20 December 2011). 1995: 1865: 1365: 1302:Single-counterparty credit limits 1083:Put a floor under the buildup of 986: 868:A new framework for exposures to 559: 447: 3648: 3636: 3295:"Testimony of William A. Loving" 2957:, 10 November 2011 & Q2 2012 2456:Susanne Craig (8 January 2012). 1909:"History of the Basel Committee" 1748: 1216:and 10.5–13% for total capital. 1066:of counterparty credit exposures 3463: 3354: 3331: 3319: 3287: 3225: 3196: 3174: 3144: 3105: 3059: 3041: 3020: 2985: 2960: 2947: 2884:Jones, Huw (15 February 2011). 2877: 2765: 2732: 2714: 2693: 2636: 2562: 2522: 2504: 2486: 2475: 2449: 2432: 2408: 2373: 2300: 2265: 2247: 2233: 2171: 2102: 2081: 2064: 2046: 2025: 1800:Financial Times report Oct 2012 1381:Milestone: Capital requirement 1259:common risk-based capital ratio 973:internal ratings based approach 914: 401:Basel III was published by the 3585:2020 extraordinary on COVID-19 3407:Congressional Research Service 1960: 1901: 1872:Coen, William (5 April 2016). 1830: 1804: 1793: 1776: 1202:Total Loss Absorbency Capacity 13: 1: 3726:Banking in the European Union 3280:Financial Services Roundtable 3233:"Burry Sees a Bubble in ETFs" 2109:Hal S. Scott (16 June 2011). 1769: 1707:. In 2019, American investor 1401:Minimum capital requirements: 1390:Minimum capital requirements: 879:(SA-CCR), which replaced the 323:Business and Economics Portal 3272:American Bankers Association 3006:10.1080/09692290.2011.603669 2445:. November 2005. p. 86. 1682:American Bankers Association 1613: 1573:Analysis of Basel III impact 1486:Based on the results of the 1271:risk-based capital surcharge 280:Pillar 2: Supervisory review 137:Pillar 1: Regulatory capital 27:Banking regulation framework 7: 3398:Bank Management and Control 2643:Cox, Jeff (19 March 2021). 2054:"AllBankingSolutions.com -" 1741: 1564:LCR comes into full effect: 1134:downturn loss-given-default 1025:credit valuation adjustment 427: 384:financial crisis of 2007–08 306:Pillar 3: Market disclosure 10: 3747: 2150:The Federal Reserve System 1442:Milestone: Leverage ratio 1329: 1153:in recessionary scenarios. 956: 930: 923:became effective in 2018. 676:High quality liquid assets 648:high-quality liquid assets 451: 392:high quality liquid assets 3691:Great Recession in Europe 3577: 3500: 3471: 3393:Basel III liquidity rules 3235:. Yahoo. 5 September 2019 1968:"Understanding Basel III" 1549:Introduction of the NSFR: 885:potential future exposure 827:" of the U.S. government. 467:CET1 capital requirements 462:List of bank stress tests 3686:2011 in economic history 3681:2010 in economic history 3676:Stress tests (financial) 2955:Revue Analyse Financière 2908:Slovik, Patrick (2012). 1538:Introduction of the LCR: 1200:institutions. (See also 1187:Net Stable Funding Ratio 1053:OTC derivative contracts 872:was introduced in 2017. 838:Level 2B assets include 712:Net Stable Funding Ratio 18:Liquidity Coverage Ratio 3388:Basel III capital rules 3077:10.1787/5kg0ps8cq8q6-en 3066:Patrick Slovik (2012). 2919:10.1787/5kg0ps8cq8q6-en 2831:10.1787/5kghwnhkkjs8-en 2058:AllBankingSolutions.com 1451:Supervisory monitoring: 1326:European implementation 975:(IRB) for credit risk; 881:Current Exposure Method 3711:Economic globalization 3643:Business and economics 3093:Cite journal requires 2935:Cite journal requires 2847:Cite journal requires 2396:Cite journal requires 2361:Cite journal requires 2323:Cite journal requires 1947:"Phase 3 arrangements" 1924:Cite journal requires 1889:Cite journal requires 1853:Cite journal requires 1623:World Pensions Council 1566:100% LCR is expected. 1508:Liquidity requirements 1499:Mandatory requirement: 1284:liquidity stress tests 1257:"including a tier one 1198:systemically important 1149:that include widening 760: 696: 638:Liquidity requirements 610: 516: 458:Capital adequacy ratio 394:, and decreasing bank 3532:2013 Saint Petersburg 3325:NY Times 1 July 2013 1295:Federal Reserve Board 1087:in the banking sector 957:Further information: 931:Further information: 843:direct impact of the 825:full faith and credit 761: 697: 611: 517: 3417:8 March 2021 at the 3261:on 24 September 2015 1581:Macroeconomic impact 1423:Conservation buffer: 1412:Conservation buffer: 1371:Capital requirements 1354:On 7 December 2017, 1247:annual capital plans 1123:Achieve the broader 1036:securities financing 726: 662: 628:U.S. Federal Reserve 580: 486: 473:risk-weighted assets 438:capital requirements 388:capital requirements 380:financial regulation 3731:Capital requirement 3184:(25 October 2011). 2981:on 1 February 2014. 2776:European Commission 1980:on 11 December 2013 1527:Observation period: 1145:Banks must conduct 454:Capital requirement 145:Capital requirement 3424:Basel III in India 3037:. 28 October 2013. 3035:cholar.harvard.edu 2794:The New York Times 2383:. 7 December 2017. 2310:. 7 December 2017. 2261:. 24 October 2013. 2159:on 2 November 2013 2072:"FDIC Publication" 1484:Final adjustments: 943:expected shortfall 891:Equity investments 756: 692: 606: 594: 589: 512: 500: 495: 3624: 3623: 3562:2018 Buenos Aires 2744:www.eba.europa.eu 2675:Morningstar, Inc. 2425:operational risks 2288:Missing or empty 1911:. 9 October 2014. 1640:US housing bubble 1570: 1569: 1505: 1504: 1429: 1428: 1316:COVID-19 pandemic 1265:scenario analysis 1232:US implementation 1096:measurement error 927:Market risk: FRTB 745: 744: 741: 732: 681: 680: 677: 668: 595: 593: 588: 551:A discretionary " 501: 499: 494: 407:COVID-19 pandemic 357: 356: 39: 16:(Redirected from 3738: 3653: 3652: 3641: 3640: 3632: 3458: 3451: 3444: 3435: 3434: 3375: 3374: 3372: 3370: 3358: 3352: 3351: 3349: 3347: 3335: 3329: 3323: 3317: 3316: 3314: 3312: 3307:on 30 April 2021 3306: 3300:. Archived from 3299: 3291: 3285: 3284: 3268: 3266: 3251: 3245: 3244: 3242: 3240: 3229: 3223: 3222: 3220: 3218: 3212:Robert Reich.org 3200: 3194: 3193: 3190:Robert Reich.org 3178: 3172: 3171: 3169: 3167: 3157: 3148: 3142: 3141: 3139: 3137: 3123: 3114: 3109: 3103: 3102: 3096: 3091: 3089: 3081: 3079: 3063: 3057: 3056: 3055:. 23 April 2014. 3053:www.heritage.org 3045: 3039: 3038: 3032: 3024: 3018: 3017: 2989: 2983: 2982: 2980: 2973: 2964: 2958: 2951: 2945: 2944: 2938: 2933: 2931: 2923: 2921: 2905: 2896: 2895: 2881: 2875: 2874: 2872: 2863: 2857: 2856: 2850: 2845: 2843: 2835: 2833: 2817: 2808: 2807: 2802: 2800: 2785: 2779: 2769: 2763: 2762: 2754: 2748: 2747: 2736: 2730: 2729: 2718: 2712: 2711: 2705: 2697: 2691: 2690: 2688: 2686: 2681:on 30 April 2021 2666: 2660: 2659: 2657: 2655: 2640: 2634: 2633: 2631: 2629: 2614: 2608: 2607: 2605: 2603: 2588: 2582: 2581: 2579: 2577: 2566: 2560: 2559: 2557: 2555: 2540: 2534: 2533: 2526: 2520: 2519: 2508: 2502: 2501: 2490: 2484: 2479: 2473: 2472: 2470: 2468: 2453: 2447: 2446: 2444: 2436: 2430: 2429: 2420: 2412: 2406: 2405: 2399: 2394: 2392: 2384: 2377: 2371: 2370: 2364: 2359: 2357: 2349: 2348:. 27 March 2020. 2342: 2333: 2332: 2326: 2321: 2319: 2311: 2304: 2298: 2297: 2291: 2286: 2284: 2276: 2269: 2263: 2262: 2251: 2245: 2244: 2237: 2231: 2230: 2219: 2208: 2207: 2196: 2187: 2186: 2175: 2169: 2168: 2166: 2164: 2158: 2152:. 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Archived from 1972: 1964: 1958: 1957: 1951: 1943: 1934: 1933: 1927: 1922: 1920: 1912: 1905: 1899: 1898: 1892: 1887: 1885: 1877: 1869: 1863: 1862: 1856: 1851: 1849: 1841: 1840:. 27 March 2020. 1834: 1828: 1827: 1825: 1823: 1818:. 24 August 2016 1808: 1802: 1797: 1791: 1790: 1788: 1780: 1758: 1753: 1752: 1751: 1678:Washington, D.C. 1636:anti-competitive 1512: 1511: 1473:Parallel run II: 1436: 1435: 1375: 1374: 1338:implementing act 1276:Market liquidity 1255:capital adequacy 1212:and 8.5–11% for 981:operational risk 765: 763: 762: 757: 746: 742: 739: 738: 733: 730: 701: 699: 698: 693: 682: 678: 675: 674: 669: 666: 615: 613: 612: 607: 596: 591: 586: 584: 553:counter-cyclical 521: 519: 518: 513: 502: 497: 492: 490: 382:revealed by the 368:capital adequacy 349: 342: 335: 288:Economic capital 255:Operational risk 37: 35:Basel Framework 32: 31: 21: 3746: 3745: 3741: 3740: 3739: 3737: 3736: 3735: 3701:Eurozone crisis 3671:Bank regulation 3661: 3660: 3659: 3647: 3635: 3627: 3625: 3620: 3573: 3496: 3491:2009 Pittsburgh 3479:2008 Washington 3467: 3462: 3419:Wayback Machine 3384: 3379: 3378: 3368: 3366: 3365:(Press Release) 3359: 3355: 3345: 3343: 3342:(Press Release) 3336: 3332: 3324: 3320: 3310: 3308: 3304: 3297: 3293: 3292: 3288: 3264: 3262: 3253: 3252: 3248: 3238: 3236: 3231: 3230: 3226: 3216: 3214: 3201: 3197: 3179: 3175: 3165: 3163: 3155: 3149: 3145: 3135: 3133: 3125: 3124: 3117: 3110: 3106: 3094: 3092: 3083: 3082: 3064: 3060: 3047: 3046: 3042: 3030: 3026: 3025: 3021: 2990: 2986: 2978: 2971: 2965: 2961: 2952: 2948: 2936: 2934: 2925: 2924: 2906: 2899: 2882: 2878: 2870: 2864: 2860: 2848: 2846: 2837: 2836: 2818: 2811: 2798: 2796: 2786: 2782: 2770: 2766: 2755: 2751: 2746:. 26 June 2018. 2738: 2737: 2733: 2720: 2719: 2715: 2703: 2699: 2698: 2694: 2684: 2682: 2667: 2663: 2653: 2651: 2641: 2637: 2627: 2625: 2615: 2611: 2601: 2599: 2596:Federal Reserve 2592:"Press Release" 2590: 2589: 2585: 2575: 2573: 2570:"Press Release" 2568: 2567: 2563: 2553: 2551: 2541: 2537: 2528: 2527: 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1334: 1328: 1306:credit exposure 1238:Federal Reserve 1234: 1125:macroprudential 1064:risk management 1057:clearing houses 994: 989: 961: 955: 935: 929: 917: 909: 907:Securitisations 901: 899:Large exposures 893: 866: 776: 737: 729: 727: 724: 723: 673: 665: 663: 660: 659: 640: 583: 581: 578: 577: 562: 489: 487: 484: 483: 469: 464: 450: 442:run on the bank 430: 416:(FRTB) and the 353: 129:Risk management 116:Monetary policy 36: 28: 23: 22: 15: 12: 11: 5: 3744: 3734: 3733: 3728: 3723: 3718: 3713: 3708: 3703: 3698: 3693: 3688: 3683: 3678: 3673: 3658: 3657: 3645: 3622: 3621: 3619: 3618: 3610: 3604: 3598: 3592: 3581: 3579: 3575: 3574: 3572: 3571: 3565: 3559: 3553: 3547: 3541: 3535: 3529: 3526:2012 Los Cabos 3523: 3517: 3511: 3504: 3502: 3498: 3497: 3495: 3494: 3488: 3482: 3475: 3473: 3469: 3468: 3461: 3460: 3453: 3446: 3438: 3432: 3431: 3426: 3421: 3409: 3401: 3395: 3390: 3383: 3382:External links 3380: 3377: 3376: 3353: 3330: 3318: 3286: 3246: 3224: 3195: 3173: 3143: 3115: 3104: 3095:|journal= 3058: 3040: 3019: 3000:(4): 609–638. 2984: 2959: 2946: 2937:|journal= 2897: 2876: 2858: 2849:|journal= 2809: 2780: 2764: 2749: 2731: 2713: 2692: 2677:Archived from 2661: 2635: 2623:Bloomberg News 2609: 2598:. 1 April 2020 2583: 2561: 2549:New York Times 2535: 2521: 2503: 2485: 2474: 2462:New York Times 2448: 2431: 2407: 2398:|journal= 2372: 2363:|journal= 2334: 2325:|journal= 2299: 2264: 2246: 2232: 2209: 2188: 2170: 2131: 2101: 2080: 2063: 2045: 2024: 1994: 1959: 1935: 1926:|journal= 1900: 1891:|journal= 1864: 1855:|journal= 1829: 1803: 1792: 1774: 1773: 1771: 1768: 1767: 1766: 1760: 1759: 1743: 1740: 1721:interest rates 1717:credit markets 1659: 1658: 1654: 1651: 1615: 1612: 1582: 1579: 1574: 1571: 1568: 1567: 1561: 1557: 1556: 1546: 1542: 1541: 1535: 1531: 1530: 1524: 1520: 1519: 1516: 1509: 1506: 1503: 1502: 1496: 1492: 1491: 1481: 1477: 1476: 1470: 1466: 1465: 1459: 1455: 1454: 1448: 1444: 1443: 1440: 1433: 1432:Leverage ratio 1430: 1427: 1426: 1420: 1416: 1415: 1409: 1405: 1404: 1398: 1394: 1393: 1387: 1383: 1382: 1379: 1372: 1369: 1367: 1366:Key milestones 1364: 1342:European Union 1330:Main article: 1327: 1324: 1320: 1319: 1312: 1309: 1299: 1291: 1273: 1233: 1230: 1214:Tier 1 capital 1206: 1205: 1190: 1182: 1181: 1180: 1179: 1178: 1156: 1155: 1154: 1151:credit spreads 1143: 1137: 1131: 1121: 1120: 1119: 1116: 1113: 1103: 1102: 1101: 1100: 1099: 1088: 1075: 1074: 1073: 1071:wrong-way risk 1067: 1060: 1049: 1046:procyclicality 1042: 1039: 1028: 1021: 1015: 1014: 1013: 1010: 1007:Tier 2 capital 1004: 1001:Tier 1 capital 993: 990: 988: 987:Implementation 985: 954: 951: 928: 925: 916: 913: 908: 905: 900: 897: 892: 889: 865: 862: 853: 852: 849:credit ratings 845:Dodd–Frank Act 840:corporate debt 836: 828: 811: 810: 807: 803: 775: 772: 771: 770: 769: 768: 767: 766: 755: 752: 749: 736: 716: 715: 707: 706: 705: 704: 703: 702: 691: 688: 685: 672: 652: 651: 639: 636: 621: 620: 619: 618: 617: 616: 605: 602: 599: 592:Total exposure 587:Tier 1 Capital 561: 560:Leverage ratio 558: 557: 556: 549: 531:Tier 1 capital 527: 526: 525: 524: 523: 522: 511: 508: 505: 468: 465: 449: 448:Key principles 446: 429: 426: 372:stress testing 355: 354: 352: 351: 344: 337: 329: 326: 325: 319: 318: 317: 316: 308: 307: 303: 302: 301: 300: 295: 293:Liquidity risk 290: 282: 281: 277: 276: 275: 274: 273: 272: 267: 262: 252: 251: 250: 245: 235: 234: 233: 228: 218: 217: 216: 211: 210: 209: 206: 196: 195: 194: 189: 179: 169: 168: 167: 162: 157: 155:Leverage ratio 152: 139: 138: 134: 133: 132: 131: 122: 113: 101: 100: 96: 95: 94: 93: 92: 91: 90: 89: 84: 79: 74: 64: 59: 49: 41: 40: 26: 9: 6: 4: 3: 2: 3743: 3732: 3729: 3727: 3724: 3722: 3721:Systemic risk 3719: 3717: 3714: 3712: 3709: 3707: 3704: 3702: 3699: 3697: 3694: 3692: 3689: 3687: 3684: 3682: 3679: 3677: 3674: 3672: 3669: 3668: 3666: 3656: 3651: 3646: 3644: 3639: 3634: 3633: 3630: 3616: 3615: 3611: 3608: 3605: 3602: 3599: 3596: 3593: 3590: 3586: 3583: 3582: 3580: 3576: 3569: 3566: 3563: 3560: 3557: 3554: 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