The New Philosophy Of Basel III

Authors

Keywords
Core Tier 1, Capital conservation buffer, Countercyclical buffer, Leverage ratio, Liquidity buffers, systematic risk, counterparty credit risk

Summary
The study discusses the major objectives of the Basel III reform package as a philosophy of the new capital accord. It emphasizes the improvement of the capital framework in five main aspects: strengthening the quality, consistency and transparency of the capital base; risk coverage improvement; supplementing the risk-based capital requirement with the leverage ratio; reduction of procyclicity of the counter-cyclical buffers; solution to the issues with the system risk and interconnectedness. The introduction of a global standard for liquidity is presented as another significant aspect in the Basel III package. The paper analyses the question to what extent the Bulgarian banking system is prepared for the new more rigid capital requirements.

JEL: G21
Pages: 46
DOI: 

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