Part A Regulatory Matters, 6 Capital Adequacy, Liquidity, and Large Exposures

Subject(s):

Regulation of banks — Basel 1 — Basel 2 — Basel 3 — Basel committee on Banking Supervision

This chapter examines the current capital adequacy framework and associated provisions designed to ensure that a bank's business is managed on a prudent basis. It also considers other closely allied topics which may affect the stability of the banking system, namely, liquidity and large exposure requirement. Topics discussed include the origins of the Basel Standards; Basel 2 and Basel 3 rules; the calculation of risk-weighted assets; the nature and effect of credit risk mitigation techniques; market risk; operational risk; and reform on Basel 2.