FRM Part II · FRM Exam Part II · Basel III: Finalising Post-crisis Reforms
Under the finalised Basel III framework, a bank's total risk-weighted assets (RWA) are calculated using its internal models. The output floor requires the bank's RWA to be at least a stated percentage of the RWA computed under the standardised approaches. What is the fully phased-in percentage?
The fully phased-in output floor is 72.5%. Total RWA from internal models cannot fall below 72.5% of the RWA calculated under the standardised approaches, which limits the capital benefit banks can gain from internal models.
- A50%
- B60%
- C72.5%Correct
- D90%
Explanation
The finalised Basel III reforms set the output floor at 72.5% of RWA computed using only standardised approaches, after a phase-in period. The 50%, 60% and 90% figures are not the final calibration; 50% is the first year of the transitional phase-in.
Did you get it right without looking?
One question tells you little. A timed set on Basel III: Finalising Post-crisis Reforms shows your real accuracy, how long you take and where you lose marks.
More Basel III: Finalising Post-crisis Reforms questions
- Under the Basel III finalised standardised approach for operational risk, a bank's Business Indicator Component (BIC) is combined with anoth…
- Under the finalised Basel III leverage ratio framework, which of the following is the buffer applied to global systemically important banks …
- A risk officer is explaining why the output floor was introduced in the finalised Basel III reforms. Which statement best captures its purpo…
- A bank uses the reduced version of BA-CVA with no recognised hedges. Under this approach, the capital requirement is driven by which of the …
- A bank has modelled-approach RWA of 850 and standardised RWA of 1,000. Its Common Equity Tier 1 capital is 85. Under the fully phased-in 72.…
- Under the finalised Basel III leverage ratio framework, a G-SIB has a leverage ratio buffer applied on top of the 3% minimum. If the G-SIB's…