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Banking Relations

A Long Lost Era of Bank Supervision

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March 20, 2015

In 1996 the BIS looked to strengthen the banking sector by having banks draw on internal models on capital.

In 1996, the Bank for International Settlements’ Basel Committee proposed standards for banks to use internal models to ensure minimum capital gives corporates new benchmarking guidelines. Using value-at-risk and other models, banks were to determine an adequate capital level.

Basel Committee believes that “proprietary models (i.e., ‘value-at-risk’ and similar methodologies), subject to specific criteria … may indeed serve as an appropriate means to levy capital charges for market risk.”
 

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