30 Questions
What is the minimum total capital ratio of risk-weighted assets?
10.5%
What is included in Common Equity Tier 1 (CET1) Capital?
All of the above
What is the minimum Common Equity Tier 1 (CET1) Capital ratio of risk-weighted assets?
4.5%
What is the purpose of the Capital Conservation Buffer?
All of the above
What is the main objective of the Loss Absorbency feature in Tier 1 and Tier 2 capital instruments?
To ensure that banks can fully absorb losses before government bailout
What is the main purpose of the Internal Capital Adequacy Assessment Process (ICAAP)?
To assess capital adequacy relative to risk profile
What is the minimum maturity requirement for Tier 2 Capital instruments?
5 years
What is the purpose of the Regulatory Adjustments to Common Equity Tier 1 (CET1) Capital?
To deduct specific items from CET1 Capital
What is the main objective of the Capital Buffers?
All of the above
What is the purpose of the Countercyclical Capital Buffer?
Not mentioned in the text
Which risk weighting is assigned to equity exposures not deducted from capital and listed on a recognized exchange?
300%
What is primarily included in Tier 1 Capital?
Common equity and retained earnings
Which ratio is introduced to ensure banks have adequate levels of liquid assets to meet short-term obligations?
Liquidity Coverage Ratio
What are banks required to perform as an internal assessment under BASEL III?
Perform their own internal assessments of externally rated exposures
What primary measure is used in the leverage ratio?
High-quality capital
Which type of instruments were phased out under the new Tier 1 Capital definition?
Step-up instruments and cumulative preferred stock
What is the risk weighting applied to Commercial Public Sector Entities (PSEs)?
100%
What is eliminated completely from the regulatory capital under Basel III?
Tier 3 Capital
Which credit risk measurement tool is suggested for assessing counterparty risks?
Stress tests
What is the goal of introducing a non-risk weighted leverage ratio under BASEL III?
To limit overall leverage levels
Which of the following is a primary aim of Basel III?
To improve risk management and governance
What is the key purpose of Common Equity Tier 1 (CET1) capital under Basel III?
To buffer against losses and provide financial stability
Basel III introduced the Leverage Ratio primarily to:
Provide a non-risk-based measure to limit excessive leverage
Which buffer is designed to absorb losses during periods of financial and economic stress?
Capital Conservation Buffer
What is the minimum requirement for the Total Capital Ratio including the Capital Conservation Buffer by January 2019?
10.5%
Which aspect is NOT a focus of Basel III reforms?
Introducing strict trading policies
What is the role of the Countercyclical Capital Buffer in Basel III?
To mitigate systemic risks during credit cycle fluctuations
When did the observation period for the Net Stable Funding Ratio begin?
January 2013
Which key feature of Basel III aims to strengthen the bank’s transparency and disclosures?
Market Discipline
What is the minimum CET1 Capital Ratio requirement by 2019 under Basel III?
7.0%
Basel III is a global regulatory standard introduced in 2010 to improve bank capital adequacy, stress testing, and market liquidity risk. It aims to strengthen financial stability and risk management.
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