Rewriting the output floor: how EU reform options would split the banks
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Making transitional relief permanent would offer the biggest cut by 2033, while market-risk changes would create winners and losers
One of the foundations of the Basel III reforms is crumbling. The latest US capital proposals do not include an output floor, Canada has frozen its floor below the international standard, and the European Union is now looking for ways to soften its own regime.
The output floor is designed to limit the savings banks can make from using internal models to calculate their risk-weighted assets (RWAs)
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