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How banks should prepare for greater economic resilience
The 2017 Basel Accord – also known as Basel 3.1, Basel III Endgame or, for our purposes, Basel IV – was primarily introduced to address the weaknesses that were made apparent by the 2008 global financial crisis. The latest reforms aim to restore credibility in how banks calculate their risk-weighted assets (RWAs), which the committee determined to be a highly variable process.
While Basel IV itself became effective on January 1, 2023, local implementation deadlines vary – but all are mindful of the upcoming 2025 and 2026 implementation deadlines. The new standard will overhaul capital requirements for global banks, transforming the corporate lending landscape in the process.
Let’s explore how in this article.