Bdc new regulations 2018
You're referring to the new regulations introduced by the Bank for International Settlements (BIS) in 2018, commonly known as the Basel IV regulations. Here's a summary:
Basel IV: Finalizing Post-Crisis Reforms
In December 2017, the Basel Committee on Banking Supervision (BCBS) published the final version of the Basel IV framework, which aims to strengthen the resilience of the global banking system. The new regulations focus on:
- Capital Requirements: The framework introduces a more risk-sensitive approach to capital requirements, with a focus on Common Equity Tier 1 (CET1) capital. Banks will need to hold more CET1 capital to cover their risk-weighted assets.
- Risk-Weighted Assets (RWAs): The new framework introduces a more granular approach to calculating RWAs, which will lead to higher capital requirements for banks with complex risk profiles.
- Counterparty Credit Risk (CCR): The regulations introduce a new approach to measuring CCR, which will lead to higher capital requirements for banks with significant derivatives exposures.
- Operational Risk: The framework introduces a new approach to measuring operational risk, which will lead to higher capital requirements for banks with significant operational risk exposures.
- Liquidity Requirements: The regulations introduce new liquidity requirements, including a Liquidity Coverage Ratio (LCR) and a Net Stable Funding Ratio (NSFR).
- Stress Testing: The framework introduces more stringent stress testing requirements, which will help banks to better prepare for potential financial shocks.
Key Dates:
- January 1, 2019: Implementation of Basel IV for large, internationally active banks.
- January 1, 2022: Implementation of Basel IV for smaller, less complex banks.
Impact:
The Basel IV regulations are expected to have a significant impact on the banking industry, including:
- Increased capital requirements, which may lead to higher costs for banks and potentially reduce lending.
- Changes to risk management practices, as banks adapt to the new regulatory requirements.
- Greater emphasis on risk assessment and stress testing, which will help banks to better prepare for potential financial shocks.
I hope this summary helps!