The US Federal Reserve will try to finalize the last phase of the Basel III capital reforms by January 2023 with new requirements to be calibrated for “capital neutrality” across the entire US banking system, a Fed official said.
“If we can’t find the right dials to turn inside the Basel III end-game risk-based reforms we’ll look at other parts of the capital framework” to ensure that it’s “no more stringent than the capital framework we had before,” Fed General Counsel Mark Van Der Weide said at a webinar* yesterday.
He added: “If we need to tweak the [Global Systemically Important Banks] capital surcharge, if we need to tweak the stress capital buffer, that will be on the table.”
At the same time, the impact of the changes ”will vary substantially across different firms depending on their individual risk profiles,” Van Der Weide said. In general, he said, Basel will reduce US capital requirements for banks’ credit risk, while increasing them for operational and market risk.
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