The regulation required under Basel II is more costly than that required under Basel III, due to the higher liquid assets requirements and the higher levels of primary capital.

Question

BlackTom AI · Accepted Answer

Consider the claim about Basel II vs Basel III regulations. 
Option 1: True. This would assert that Basel II is more costly due to higher liquid asset requirements and higher primary capital levels. In reality, Basel III introduced substantially stricter standards (e.g., higher minimum common equity tier 1 capital, additional capital buffers, liquidity coverage ratio, net stable funding ratio) that increased both capital and liquidity requirements. Therefore this option misstates which framework is more costly.
Option 2: False. The core truth is that Basel III imposes stronger and more expensive requirements than Basel II, not the other way around. Basel III raised the quantity and quality of capital (notably common equity) and added liquidity and funding standards, which collectively raise the cost of compliance relative to Basel II. The statement incorrectly reverses the comparative burden.
In summary, Basel III is designed to be more stringent and costly for banks compared to Basel II due to tighter capital, liquidity, and funding requirements, so the claim as stated is incorrect.

FINS5530-Financial Institution Mgmt - T3 2025

The regulation required under Basel II is more costly than that required under Basel III, due to the higher liquid assets requirements and the higher levels of primary capital.

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FINS5530-Financial Institution Mgmt - T3 2025

The regulation required under Basel II is more costly than that required under Basel III, due to the higher liquid assets requirements and the higher levels of primary capital.

View Explanation

Log in for full answers

Similar Questions

Which of the following statements is false?

Countries around the world adopt bank regulation broadly consistent with the framework issued by the Basel Committee because

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The supervisory and regulatory activities of each Federal Reserve Bank in its district includes the authority to do which of the following?

Each Federal Reserve Bank has supervisory and regulatory authority over the activities of Blank ______ and Blank ______ located in their districts.

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Nationally chartered banks ("National Banks") are those chartered through the

In the area of bank supervision, which of the following are functions of the Federal Reserve Banks? Examinations of state member banks Approval of member bank and bank holding company acquisitions Deposit insurance

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Each Federal Reserve Bank has supervisory and regulatory authority over the activities of Blank and Blank located in their districts.