Incentives remain in banking book vs trading book choice

banking-book

CLICK HERE TO VIEW THE FULL ARTICLE The ability of banks to use their own internal models to determine regulatory capital requirements has come under huge scrutiny recently. The Basel Committee on Banking Supervision is currently considering introducing a number of constraints on bank internal ratings-based (IRB) model parameters, following two reports that showed wide variations in bank risk-weighted asset (RWA) numbers (BCBS, 2013 (a, b)). Some domestic supervisors have already taken the pl