Basel III Detail

About Basel III Detail

Basel III, agreed in December 2010, strengthened bank capital requirements in response to the 2008 crisis. Minimum common equity tier 1 capital was raised from 2 to 4.5 percent of risk weighted assets, with a 2.5 percent conservation buffer. A countercyclical buffer of up to 2.5 percent can be imposed during credit booms. A leverage ratio of 3 percent prevents excessive leverage regardless of risk weighting. Two liquidity ratios were introduced: the liquidity coverage ratio requires sufficient liquid assets to survive 30 days of stress, and the net stable funding ratio requires stable funding for long term assets. Implementation was repeatedly delayed, with full implementation pushed to 2028.