Basel Committee revamps approach to credit risk models

The BIS tower in Basel

The Basel Committee on Banking Supervision has published consultation documents on changes to its standardised approaches to modelling credit risk, and proposals for a "capital floor" that seek to limit banks' internal risk assessments.

The standardised approaches to modelling credit risk are targeted at smaller banks that may be less sophisticated and less likely to benefit from the complexities of the internal ratings-based (IRB) approach employed by the largest global banks.

However, the

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