Resources for Basel II Capital Accord (Basel II)

Basel II – US loophole for Standardised Approach

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As expected the Federal Deposit Insurance Corporation (FDIC), on Monday, became the fourth and final US regulator to ratify the implementation of the “Final Rule” implementing the Advanced Approaches of the Basel II Capital Accord. They emphasised that only the Advanced Approaches would be used - but left a loophole for those advocating the Standardised Approaches for their banks.

However, each federal banking agency has retained the discretion to exempt banks from the requirement to use these approaches, or to allow others to use them on an opt-in basis. The agencies are also working on a proposed rule that would provide a standardised approach as an option for the banks not subject to the Advanced Approaches.

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