Basel Committee Releases Economic Capital Paper for Comment

The Basel Committee on Banking Supervision has published for comment its findings and recommendations on the range of practices and issues in economic capital modelling. This work focuses on the use of economic capital measures, governance processes, risk measurement and aggregation, and the validation of economic models. Klaas Knot, chairman of the Basel Committee’s Risk Management and Modelling Group and division director of Supervision Policy for the Netherlands Bank, said: “The paper presents the current state of practices in economic capital modelling. It discusses the steps banks have taken to address the modelling challenges they face and reviews supervisory concerns relating to current bank practices.”


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