The main points of Basel III:

Increased capital reserves: In addition to the existing system of capital regulation, two new Items are added, namely

capital buffer, which comes into force in cases where the activities of the bank increase very rapidly

countercyclical buffer, which should prevent the tendency that capital reserves according to the existing rules will be small during booms and large in slumps

Leverage rule: This is a rule which is aimed to prevent too small capital reserves even in cases where assets have low risk and therefore would not give rise to building up reserves by using the existing rules
Liquidity rules: High quality assets should be large enough to cover one month net cash out- flow.

	Created by dekanola almost 11 years ago

university Global Banking Note on Revision Notes 2, created by dekanola on 10/12/2013.