Basel III: Regulatory framework on bank capital adequacy
Q. Which of the following statements is/are correct about Basel III?
1. It is compulsory regulatory framework on bank capital adequacy, stress testing and market liquidity risk.
2. Basel III norms will be implemented from 31 March 2018.- Published on 16 Nov 15a. Only 1
b. Only 2
c. Both
d. None
ANSWER: None
- Basel III is a global, voluntary regulatory framework on bank capital adequacy, stress testing and market liquidity risk.
- It was agreed upon by the members of the Basel Committee on Banking Supervision in 2010–11, and was scheduled to be introduced from 2013 until 2015; however, changes from 1 April 2013 extended implementation until 31 March 2018 and again extended to 31 March 2019.
- The third installment of the Basel Accords (see Basel I, Basel II) was developed in response to the deficiencies in financial regulation revealed by the financial crisis of 2007–08.
- Basel III was supposed to strengthen bank capital requirements by increasing bank liquidity and decreasing bank leverage.
