On March 24, The Basel committee on Banking supervision released the consultative document “Reducing variation in credit risk-weighted assets – constraints on the use of internal model approaches”.

The Basel committee proposes that banks no longer will have the opportunity to use advanced internal ratings-based approach for specific exposure categories, such as loans to financial institutions. Instead the banks will have to use the Basel committees standard approach.

The Basel committee also proposes new minimum levels for parameters used to measure exposure for portfolios where it still will be possible to use the internal models to calculate credit risk.

Read the Basel committees press release here.