Basel Committee will look into calculations of risk-weighted assets

06/29/2011 | Risk.net (subscription required) · Bloomberg

The Basel Committee on Banking Supervision recently agreed to subject systemically important financial institutions to increased capital requirements based on their risk-weighted assets. However, there are concerns about how banks calculate those assets. "There is no question that the weightings can be manipulated," said Charles Goodhart, a former policymaker at the Bank of England. "They are light-years away from being scientific. The idea that risk can be captured and then not adjusted to reflect dynamic markets is absolutely flawed."

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Risk.net (subscription required) · Bloomberg

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