New Basel III capital standards
Last December 16, 2010 the Basel Committee issued a set of global regulatory standards on bank capital adequacy and liquidity with a view to reduce the moral hazard of systemically important financial institutions and to reduce the risk of spillover from the financial sector to the real economy.
The new framework notably provides for:
- an unweighted leverage ratio;
- two new capital buffers: a conservation buffer and a countercyclical buffer;
- new and substantial capital charges for non-cleared derivative and other financial market transactions;
- significant revisions to the rules on the types of instrument that count as bank capital.
The Basel III capital standards are meant to be implemented starting January 1, 2013 and fully phased in by January 1, 2019.