ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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True but this contradicts the previous question
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None of the above
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Detailed explanation-1: -The Basel Accords are a series of three sequential banking regulation agreements (Basel I, II, and III) set by the Basel Committee on Bank Supervision (BCBS). The Committee provides recommendations on banking and financial regulations, specifically, concerning capital risk, market risk, and operational risk.
Detailed explanation-2: -For example, Basel III requires banks to have a minimum amount of common equity and a minimum liquidity ratio.
Detailed explanation-3: -Basel III introduced a non-risk-based leverage ratio as a backstop to the risk-based capital requirements. Banks are required to hold a leverage ratio in excess of 3%, and the non-risk-based leverage ratio is calculated by dividing Tier 1 capital by the average total consolidated assets of a bank.
Detailed explanation-4: -Minimum capital is the technical, quantitative heart of the accord. As in Basel I, the new standard required banks to hold capital against 8% of their risk-weighted assets. But Basel II also introduced a tiered system for different types of capital.