The capital regulations proposed by the Bank for International Settlement's Basel Committee grow ever more intricate. From the original 1988 Basel I Accords1 to today's Basel III capital standards, complexity has grown to the point where some veteran bankers and their regulators may at times not always fully understand the rules, or the risk parameters and assumptions in a bank's asset portfolio.
In an effort to stem the tide of ever-increasing complexity, on July 8, 2013, the Basel Committee issued a Discussion Paper "The regulatory framework: balancing risk sensitivity, simplicity and comparability" to the public for comment.2 Comments are due Oct. 11, 2013, and internationally active banks should take advantage of the opportunity to advise the committee on the effect such complexity has had on their operations and compliance. This month's column will discuss major points of the discussion paper and the questions the Basel Committee is soliciting from commenters.
