Europe’s next chore: cleaning a floor made messy by the US
Rejection of Basel III’s output floor leaves EU with some difficult decisions to make
When global regulators were negotiating the final details of the post-crisis capital reforms in 2017, US representatives at the Basel Committee on Banking Supervision insisted that if banks were going to be allowed to model their own capital requirements, then the risk-weighted asset (RWA) total should be subject to a floor set at some percentage of the cruder, standardised approaches.
Now, the
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