Basel Accords - Standardized Approach

Overview

The standardized approach is an approach that is appropriate for the less sophisticated banks, in particular, those for which the regulators feel thet the Internal Ratings Based approcah is inappropriate.

The standardized approach is similar to the framework developed in Basel I, except that the calculation of risk weights changed. The risk weights are largely based on credit ratings that are provided by third party firms.

Risk Weights

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