Tuesday, October 12, 2021

Basel 1, 2, 3

 

BASEL I
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  • Issued in 1998
  • Focuses on Credit Risk and Risk Weighting of Assets
  • Assets of banks are classified into 5 groups according to credit risk:
    • 0%: (for example cash, bullion, home country debt like Treasuries)
    • 20%: (securitisations such as mortgage-backed securities (MBS) with the highest AAA rating)
    • 50%: (municipal revenue bonds, residential mortgages)
    • 100%: (for example, most corporate debt)
    • No Rating: 

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