Basel and Fed G-Sib methods pose dual test to US banks
Different emphasis of rival frameworks could frustrate bank efforts to reduce systemic risk
The two methodologies used by US regulators to gauge banks’ systemic threat weight their risks differently, complicating the ability of firms to reduce or cast off applicable capital add-ons, a Risk Quantum analysis shows.
US banks are subject to two methods of measuring their systemic riskiness: Method 1, based on the Basel Committee framework; and Method 2, drafted by the Federal Reserve. Both
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