Chapter 2

Question 1

What is the BIS

Answer 1

Bank for International Settlements
The bank for Central banks
The Regulators regulator

Question 2

What is the Basel Committee

Answer 2

Pillar 1: Minimum Level of Capital
Pillar 2: Firms opinion on level of capital to be held
Pillar 3: Public disclosure of firms capital and risk management

Question 3

What Capital does a bank need to consider when running a business

Answer 3

Economic Capital: Needed for day to day business
Regulatory Capital: Mandated by regulators

Question 4

What are the Pillar 1 Requirements

Answer 4

8%
Calculated using Capital/(Credit+ Market + Operational risk)

Question 5

What is Pillar 2 for

Answer 5

It allows a firm to provide extra information on any risks/ mitigations that should be taken into account when deciding capital adequacy requirements

Question 6

What is the Basel Concordant on cross border banking

Answer 6

Framework for banks that operate in multiple juristictions