Basel III: A global regulatory framework for more resilient banks and banking systems - revised version June 2011

This version

BCBS  | 
01 June 2011
Status:  Consolidated


This standard has been integrated into the consolidated Basel Framework.

The Basel III framework is a central element of the Basel Committee's response to the global financial crisis. It addresses a number of shortcomings in the pre-crisis regulatory framework and provides a foundation for a resilient banking system that will help avoid the build-up of systemic vulnerabilities. The framework will allow the banking system to support the real economy through the economic cycle. 

This document, originally published in December 2010 and updated in June 2011 (to reflect a minor modification to the credit valuation adjustments applied to address counterparty credit risk in bilateral trades) represents the initial phase of Basel III reforms, which focused on strengthening the following components of the regulatory framework: 

  • improving the quality of bank regulatory capital by placing a greater focus on going-concern loss-absorbing capital in the form of Common Equity Tier 1 (CET1) capital;
  • increasing the level of capital requirements to ensure that banks are sufficiently resilient to withstand losses in times of stress;
  • enhancing risk capture by revising areas of the risk-weighted capital framework that proved to be acutely miscalibrated, including the global standards for market risk, counterparty credit risk and securitisation;
  • adding macroprudential elements to the regulatory framework, by: (i) introducing capital buffers that are built up in good times and can be drawn down in times of stress to limit procyclicality; (ii) establishing a large exposures regime that mitigates systemic risks arising from interlinkages across financial institutions and concentrated exposures; and (iii) putting in place a capital buffer to address the externalities created by systemically important banks; and
  • specifying a minimum leverage ratio requirement to constrain excess leverage in the banking system and complement the risk-weighted capital requirements. 

The Committee has also introduced an international framework for mitigating excessive liquidity risk and maturity transformation, through the Liquidity Coverage Ratio and Net Stable Funding Ratio, which is described in a separate publication

The original version of the Basel III capital rules can be found here. The modification to the credit valuation adjustments framework is decribed in the press release