Status: Draft -- Not PublishedWill be live at 12/08/2015 00:00
IIF Risk-Weighted Assets Letter to Basel Committee on Banking Supervision
Tuesday, December 8, 2015
In the context of the current debates on RWA methodologies, the IIF has written to the Basel Committee on Banking Supervision (BCBS) and Group of Governors and Head of Supervision (GHOS) to convey the criticality of preserving risk-sensitivity as a central element in the capital framework.
Significantly, this letter highlights the work that the IIF has already undertaken in interrogating and explaining RWA variance, acknowledging that this variance needs to be reduced whilst reiterating the proactive measures to pursue this, and the industry's willingness to improve and harmonize risk modeling.
The letter highlights the perils of over-riding risk-based capital metrics with simplistic measures, noting that upcoming deliberations, if unattended, could set in stone detrimental decisions on the structure and calibration of the global capital framework.