Basel III Requirements
Master global banking regulations that ensure financial system stability through capital, liquidity, and leverage standards
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Banking Regulation
Why Basel III Matters
The 2008 financial crisis revealed critical weaknesses in global banking regulation. Banks operated with insufficient capital, poor liquidity management, and excessive leverage—leading to government bailouts and economic devastation. Basel III was created to prevent future crises by establishing minimum standards for bank safety.
❌ The 2008 Problem
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Thin Capital Buffers: Banks held minimal capital relative to risky assets
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Liquidity Crisis: Unable to meet short-term obligations when markets froze
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Excessive Leverage: Banks borrowed 30-50x their capital base
✅ The Basel III Solution
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Higher Capital Requirements: Banks must hold more high-quality capital
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Liquidity Standards: Banks must maintain liquid assets to survive stress
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Leverage Limits: Maximum debt-to-equity ratios enforced
4.5%
Minimum CET1 ratio (up from 2%)
100%
Liquidity Coverage Ratio requirement
3%
Minimum leverage ratio