Basel III and the continuing evolution of bank capital regulation

Abstract: Adopted in part as a response to the 2007-08 financial crisis, the Basel III accord is the most recent revision to international capital standards for banks. Basel III primarily relies on methods similar to those of Basel II for assessing the relative risks of different types of assets. The main focus of the changes in Basel III, rather, is to increase banks' equity capital requirements. This emphasis is a reflection of the conclusions drawn from the crisis: that bank fragility is more prevalent than previously thought and that the motivation for governments to assist banks in poor financial condition is very strong during a crisis.

Keywords: Financial markets; Financial institutions;

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Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Richmond Fed Economic Brief

Publication Date: 2011

Issue: Jun

Order Number: 11-6