Basel Committee on Banking Supervision: Capital floors - the design of a framework based on standardised approaches

21 December 2014

The proposed floor would replace the existing transitional capital floor based on the Basel I framework.

The floor will be based on revised standardised approaches for credit, market and operational risk, which are currently under consultation.

The floor is meant to mitigate model risk and measurement error stemming from internally-modelled approaches. It would enhance the comparability of capital outcomes across banks, and also ensure that the level of capital across the banking system does not fall below a certain level.

As noted in the Committee's November 2014 report to the G20 Leaders, the Committee is taking steps to reduce variation in capital ratios between banks. The proposed capital floor is part of a range of policy and supervisory measures that aim to enhance the reliability and comparability of risk-weighted capital ratios.

The Committee will consider the calibration of the floor alongside its work on finalising the revised standardised approaches.

Comments on the proposals should be uploaded by Friday 27 March 2015.

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