FRM Part II · FRM Exam Part II · High-level Summary of Basel III Reforms
Under the finalised Basel III reforms, the output floor is phased in to which final level of RWA calculated using the standardised approaches?
The fully phased-in output floor is 72.5% of the risk-weighted assets calculated under the standardised approaches. Total internal-model RWA cannot fall below this level. The floor was introduced gradually, starting at a lower percentage, before reaching 72.5%.
- A50%
- B60%
- C72.5%Correct
- D90%
Explanation
The finalised framework sets the floor at 72.5% of standardised RWA once fully phased in. Lower figures such as 50% were transitional starting points, so they are not the final calibration.
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