Basel III
Global banking framework establishing more rigorous capital and liquidity standards.
Detailed Description
Basel III
What is the main purpose of Basel III?
Basel III aims to strengthen regulation, supervision, and risk management in the banking sector to improve the resilience of banks and the financial system.
What are the key liquidity standards introduced by Basel III?
The two key liquidity standards are the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR).
How does Basel III differ from Basel I and II?
Basel III builds upon Basel I and II by introducing more stringent capital, liquidity, and leverage requirements, addressing systemic risks and enhancing risk management.
What is the minimum CET1 capital ratio required under Basel III?
The minimum CET1 capital ratio is set at 4.5% of risk-weighted assets, with a total capital requirement of 8%.
What challenges have banks faced in implementing Basel III?
Banks have faced challenges in raising capital, managing liquidity, and adapting to stringent requirements, which may impact lending practices and profitability.