Basel III
International banking regulation framework for capital and liquidity.
Definition
Basel III is a comprehensive set of international banking regulations developed by the Basel Committee on Banking Supervision. It strengthens bank capital requirements, introduces new leverage and liquidity requirements, and establishes macroprudential elements like countercyclical capital buffers. Basel III endgame (also called Basel IV) is the final phase of implementation.
Why It Matters
Basel III requirements shape bank business models, capital allocation, and return profiles. Banks must hold more and higher-quality capital, which limits leverage but increases financial stability. Proposed Basel III endgame rules could significantly increase capital requirements for the largest U.S. banks.