Basel Proposes Using Risk Drivers Over Credit Ratings
The Basel Committee on Banking Supervision (BCBS) has released a proposal to reduce the reliance on credit agencies and internal models when calculating risk-weighted assets for regulatory capital, requesting comments by March 27 next year.
“The hard-wiring of external credit assessments into standards, laws and regulations may often lead to mechanistic reliance on ratings by market participants, resulting in insufficient due diligence and poor risk management on the part of lenders and investors,” the BCBS writes in exclusively for paying members. Access all of our content on including years of timeless investment news and in depth analysis for only a few dollars a month by signing up here while also supporting quality content and journalism, or learn more about our premium content here
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