Basel III

Basel III was developed by the Basel Committee on Banking Supervision in response to the 2008 financial crisis to strengthen bank regulation and supervision worldwide. The framework increases capital requirements, introduces new capital buffers, and establishes minimum leverage ratio requirements. It includes liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) requirements to ensure banks maintain adequate liquidity buffers. Basel III enhances risk coverage, including counterparty credit risk and operational risk, while improving risk management and governance. The standards are implemented by national regulators with phase-in periods to allow banks to adjust. Basel III aims to improve the banking sector's ability to absorb financial and economic stress while maintaining credit flow to the economy.