Basel_Changes_BUS_419

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Simon Fraser University *

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Oct 30, 2023

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Basel Changes My article is from Bloomberg and it talks about new changes to derivative exposure Basel is essentially a group of powerful central bank governors which make financial regulations worldwide Basel is set to replace its old method of calculating derivative exposure with a new one This new method could lead to higher leverage ratios fir banks; which means a lower amount of assets held and higher leverage ratios I think this should be introduced in steps and not completely all at once because higher leverage ratios look more appealing on the financial statements Having higher leverage ratios is better for the financial system in general because it means that the company has higher capital compared to their average total consolidated assets Basel also plans to increase the minimum leverage ratio for the biggest U.S. banks, meaning that banks are now required to have higher core capital figures A 2013 study by the Clearing House found that the old method resulted in $1 trillion worth of exposures exceeded limits for the 7 biggest U.S. banks and with the new method, they estimate less than $100 billion actually exceed limits More information about Basel’s new leverage rules is expected in the next few weeks
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