Fed floats ‘advanced approach' for calculating risk weights

federal reserve

The Federal Reserve said on Friday that it will allow the country's biggest banks to use an alternative approach for calculating and disclosing risk-based capital ratios, starting in the next quarter.

The so-called ‘advanced approach' – essentially a supplementary capital ratio that uses a broader set of exposures in the denominator – is based on standards developed by the Basel Committee on Banking Supervision.

Requiring lenders to meet "specific risk measurement and management criteria", it

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