Basel IV is not a formally recognized framework. Rather, it is a term that is sometimes used to describe potential changes to the existing Basel III framework, which is a set of international banking regulations that were developed by the Basel Committee on Banking Supervision (BCBS).
Basel III consists of several different components, including minimum capital requirements, a leverage ratio, and a liquidity coverage ratio. These regulations are designed to improve the stability and resilience of the global banking system by setting minimum standards for banks’ capital and liquidity levels.
There have been discussions among regulators and industry stakeholders about potential changes to the Basel III framework, which could be referred to informally as “Basel IV.” These discussions have focused on issues such as the treatment of operational risk, the use of internal models to calculate capital requirements, and the potential for additional risk weights or other constraints on banks’ activities.
However, it is important to note that there is no formal “Basel IV” framework that has been officially adopted by the BCBS or other regulatory bodies. Any potential changes to the Basel III framework would need to be formally proposed and adopted through the usual regulatory process.
This page was last updated on January 3, 2023.