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Due to the international financial crisis that occurred between 2007 - 2009 and the effects it had on the world economy, the Basel Committee on Banking Supervision signed in December 2010 a set of measures to strengthen regulation, supervision and risk management in banks.
These measures are known as Basel III and are promoted by the G-20 and the Financial Stability Council (CEF), an international body that aims to maintain the efficiency and stability of the financial system.
In general, Basel III seeks that banks have sufficient funds to improve their response capacity to situations of economic and financial disturbance, in order to have greater global stability. For this reason, among others, it requires having:
Basel III is a much more demanding regulation unlike the provisions of Basel I, which was signed in 1988 and established the principles on which banking should be based, and Basel II, signed in 2004 and it allowed banks to apply risk ratings based on their internal models.
The agreement determines:
In December 2017, the Basel Committee on Banking Supervision approved some reforms to the Basel III framework to respond to the deficiencies identified by the global financial crisis and "lay the regulatory foundations for a resilient banking system that supports the real economy".
According to the Committee, the main objective of these reforms is "to restore the credibility of the calculation of risk-weighted assets (RWA) and to improve the comparability of bank capital ratios".
Therefore, taking into account that risk-weighted assets are "an estimate of risk that determines the minimum level of regulatory capital that a bank must maintain in order to face unexpected losses", the Basel III reforms consisted of:
The maximum date for implementation of these new provisions by banking entities with international activity is January 1, 2022.