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Basel Comparison Proper

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Md. Nahid Uz Zaman Ratul
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18 views1 page

Basel Comparison Proper

Uploaded by

Md. Nahid Uz Zaman Ratul
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Comparison of Basel I, Basel II, and Basel III

Aspect Basel I Basel II Basel III

Introduction 1988 2004 2010 (in response to the 2008 financial cris

Objective Ensure capital adequacy in banks. Improve risk management and refine capital Strengthen bank resilience and address sy

Focus Area Credit risk. adequacy.


Credit, market, and operational risks. risks.
Liquidity risk, leverage, and capital quality.

Risk Weighting Simplistic, based on broad categories (e.g., More nuanced with internal ratings-based (IRB) Incorporates stricter risk-weighting and rev

Minimum Capital Ratio corporate


8% of risk-weighted
loans 100%).
assets (RWA). approaches.
Same (8%), but risk-weighting is more refined. metrics.minimum: Common Equity Tier 1 (C
Raised

Leverage Ratio Not addressed. Not addressed. to 4.5%, Total


Introduced minimum
Capitalleverage
to 10.5%ratio
(including
of 3%.

Liquidity Coverage Not addressed. Not addressed. buffers). Liquidity Coverage Ratio (LCR)
Introduced

Capital Quality Basic definitions of capital adequacy. Tiered structure with greater emphasis on quality. Stricter
Net Stable
definitions;
Fundingfocus
Ratioon
(NSFR).
Common Equi

Stress Testing Not included. Introduced but not mandatory globally. 1 (CET1).
Strengthened, with mandatory stress tests

Countercyclical Buffer Not addressed. Not addressed. buffers.


Introduced to protect against economic cyc

Systemic Risk Limited scope. Moderate, with no explicit systemic focus. (0-2.5%).
Explicit measures to address risks posed b

globally significant banks.

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