ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Yes, I understand this from the notes
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No, I don’t understand this from the notes
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No, I don’t understand this, as I have not read the notes
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None of the above
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Detailed explanation-1: -Basel I is a set of international banking regulations established by the Basel Committee on Banking Supervision (BCBS). It prescribes minimum capital requirements for financial institutions, with the goal of minimizing credit risk.
Detailed explanation-2: -Economic capital (EC) refers to the amount of risk capital that a bank estimates it will need in order to remain solvent at a given confidence level and time horizon. Regulatory capital (RC), on the other hand, reflects the amount of capital that a bank needs, given regulatory guidance and rules.
Detailed explanation-3: -Basel III is an international regulatory accord that introduced a set of reforms designed to mitigate risk within the international banking sector by requiring banks to maintain certain leverage ratios and keep certain levels of reserve capital on hand. Begun in 2009, it is still being implemented as of 2022.
Detailed explanation-4: -Regulation is also important because it promotes financial stability by limiting the ability of banks to engage in activities that could lead to a systemic crisis. In addition, bank regulation helps to ensure that banks can serve as reliable sources of credit for businesses and households.