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24 January 2018

Basel IV: finalizing post-crisis reforms

On 7 December 2017, the Basel Committee on Banking Supervision (BCBS) published a document finalizing the Basel III reforms, also known informally as Basel IV. The document concludes the proposals and consultations ongoing since 2014 in relation to credit risk, credit value adjustment (CVA) risk, operational risk, output floors and leverage ratio. The key objective of the revisions is to reduce excessive variability of risk-weighted assets (RWAs). At the peak of the global financial crisis, a wide range of stakeholders lost faith in banks’ reported risk-weighted capital ratios. The Committee’s own empirical analyses also highlighted material variability in banks’ calculation of RWA. The implementation date is 1 January 2022, with the output floor phased from 1 January 2022 to 1 January 2027.

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Document ID: 2018-5178

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