BCBS has finalized the first version of the consolidated Basel framework and set out changes to the draft framework, along with the additional frequently asked questions (FAQs) since the publication of the draft consolidated framework in April 2019. The framework brings together all of the global standards of the Basel Committee for the regulation and supervision of banks.
The consolidated framework, which is available in a modular format, comprises 14 "standards," setting out requirements on specific topics, each of which is further divided into "chapters":
- Scope and definitions module, which describes the scope of application of the Basel Framework
- Module on Definition of capital, which describes the criteria that bank capital instruments must meet to be eligible to satisfy the Basel capital requirements as well as necessary regulatory adjustments and transitional arrangements
- Risk-based capital requirements module, which describes the framework for risk-based capital requirements
- Module on Calculation of RWA for credit risk, which describes how to calculate capital requirements for credit risk
- Module on Calculation of RWA for market risk, which describes how to calculate capital requirements for market risk and credit valuation adjustment risk
- Module on Calculation of RWA for operational risk, which describes how to calculate capital requirements for operational risk.
- Leverage ratio module, which the simple, transparent, non-risk-based leverage ratio
- Liquidity Coverage Ratio module, which is a measure that promotes the short-term resilience of a bank's liquidity risk profile
- Net Stable Funding Ratio module, which requires banks to maintain a stable funding profile in relation to the composition of their assets and off-balance-sheet activities
- Large exposures module, which requires banks to measure their exposures to a single counterparty or a group of connected counterparties and limit the size of large exposures in relation to their capital
- Margin requirements module, which establishes minimum standards for margin requirements for non-centrally cleared derivatives
- Pillar 2 supervisory review process module, which ensures that banks have adequate capital and liquidity to support all the risks in their business, especially with respect to risks not fully captured by the Pillar 1 process, and encourages good risk management.
- Disclosure requirements module, which aim to encourage market discipline
- Module on Basel Core Principles for Effective Banking Supervision, which provide a comprehensive standard for establishing a sound foundation for the regulation, supervision, governance, and risk management of the banking sector
Keywords: International, Banking, Basel III, Consolidated Basel Framework, BCP, Pillar 1, Pillar 2, Pillar 3, BCBS
Previous ArticleUS Agencies Announce Results of Assessment of Bank Resolution Plans
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
BoE has set out a three-phased plan to transform data collection from the UK financial sector over the next decade.
BIS recently made a couple of announcements with respect to the planned and ongoing work in the area of financial technology.
ESRB updated the list of national macro-prudential measures applied by each member state in the European Economic Area.
BoE has set out results of a survey on the impact of COVID-19 events on the use of machine learning and data science.
In response to a request from the European Council and Parliament, ECB published an opinion on the proposed regulation on markets in crypto-assets.
APRA announced the updated aggregate amounts for the 2021 Committed Liquidity Facility (CLF) established between the Reserve Bank of Australia (RBA) and certain locally incorporated authorized deposit-taking institutions that are subject to the Liquidity Coverage Ratio (LCR).
ECB published supervisory Memorandums of Understanding (MoUs) with UK as well as other European and non-European authorities.
EIOPA identified business model sustainability and adequate product design as the two EU-wide strategic supervisory priorities.
After considering comments received on the November 2020 proposal, US Agencies (FDIC, FED and OCC) are proceeding with the proposed revisions to the reporting forms and instructions for Call Reports FFIEC 031, FFIEC 041, and FFIEC 051.