Capital floors could spur risk-taking – Swedish FSA
"Very careful" calibration needed to avoid bad incentives, says senior supervisor
If regulators impose harsh minimums on modelled capital numbers, it will encourage banks to take more risk, a senior bank supervisor has warned.
The Basel Committee on Banking Supervision is working on a system of floors that would prevent modelled risk-weighted assets (RWAs) falling below some percentage of the standardised capital approaches for credit, market and operational risk. Proposals were
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