Basel III – Updates to the Basel II accord

The principal message of the Basel II framework is Capital Adequacy. Basel II signalled a move away from a purely static regulator driven capital adequacy measure to an internal and relatively invasive assessment of the capital profile of a bank, called the Internal Capital Adequacy Assessment Process (ICAAP).Basel III introduces significant reforms to the Basel II framework primarily by setting out the supervisory framework for liquidity risk measurement via two minimum funding liquidity standards.

To understand Basel II & III, you have to start with the history of banking regulation. To put Basel II to work, you have to understand why the standard failed during the 2007-2009 financial crisis and why US regulators opposed it tooth and nail. Take a walk through the recent post section to see Basel III updates to the Basel II accord. Give the modeling section a spin to get your hands dirty with Excel.

Basel II and III

Recent Posts

  1. CCAR (Comprehensive Capital Analysis and Review) & Basel III – Overview
  2. Probability of Shortfall and Expected Shortfall with or without Basel III – Financial Risk Management Training Course – Day Three Update
  3. BASEL III Updates – November 2014
  4. Basel III Enhancement – Linking liquidity crisis with Liquidity Coverage Ratio and Stable Funding Ratios
  5. Liquidity Risk Monitoring
  6. Net Stable Funding Ratio
  7. Liquidity Coverage Ratio – The Denominator
  8. Liquidity Coverage Ratio – The Numerator
  9. Supervisory Approach to Liquidity Ratio Standards
  10. Setting Risk Limits: Worst Case Loss versus Most likely loss

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