Basel 3 or Basel 4? Where do we stand

On December 7th 2017 the Basel Committee on Banking Supervision (BCBS) disclosed the new rules completing Basel 3 reforms. At the press conference announcing the achievement, the new set of rules (also known as “Basel 4”) was presented by Mario Draghi as “the end of the game”.

A key objective of the revisions is to reduce the excessive variability of risk-weighted assets (RWAs) among different banks and jurisdictions by applying the principles of simplicity, comparability and risk sensitivity already outlined in 2013.

This white paper analyzes the new set of Basel 3 rules (also known as “Basel 4”) and the proposed changes to approaches for credit risk. It further offers Prometeia’s views on the implementation of these new rules in the current EU banking regulatory framework.