What is Basel 4?
Basel 4 is the nickname for a suggested standard on capital reserves for banks. This was created to to alleviate the risk of financial crisis.
Where have you heard about Basel 4?
Basel 4 is the follow-on to Basel 3, which has an official technical implementation deadline of 2019. However, due to specific movement in the banking markets it has been decided that the rules need to be stricter still and these new rules have been dubbed Basel 4.
What you need to know about Basel 4.
Basel 4 includes an in-depth review of financial statistics, a requirement for all banks to reach larger maximum average ratios and an emphasis on standardised models over internal models. Whereas Basel 3 focused on regulatory capital, Basel four focuses on risk related assets or capital requirements. According to Martin Neisen of PWC, Basel 4 is concerned with “changing the methods for the calculation of risk related assets, for all types of risk”.