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Basel warns of flaws in bank risk modelling 

June 8, 2015

James Eyers, Sydney Morning Herald

As global regulators convene in Basel, Switzerland, on Tuesday to debate an overhaul of the way banks assess risk, the Joint Forum has warned against giving big banks too much discretion to work out their own "risk weights" on assets, an assessment that determines how much capital is held to protect the financial system from external shocks.

The Joint Forum is a regulatory group based out of the Bank for International Settlements that combines the Basel Committee on Banking Supervision (BCBS), the International Organisation of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS). The Australian Prudential Regulation Authority and Australian Securities and Investments Commission are among its members. 

In a communiqué issued last week, the forum said global bank supervisors "should be cautious against overreliance on internal models for credit risk management and regulatory capital".

Read more: The Sydney Morning Herald

 
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