Circular
Board Issues Proposed Rule on Basel II Risk-Based Capital Requirements
June 26, 2008
Circular No. 11965

The Federal Reserve Board has proposed a rule for public comment that would implement certain of the less-complex approaches for calculating risk-based capital requirements that are included in the international Basel II capital accord.

The proposal, known as the standardized framework, would be available for banks, bank holding companies and savings associations not subject to the advanced approaches of Basel II. Under the advanced approaches rule, which took effect April 1 and is mandatory only for large, internationally active banking organizations, banking organizations are required to develop rigorous risk-measurement and risk-management techniques as part of a new risk-sensitive capital framework. The standardized framework also seeks to more closely align regulatory capital requirements with institutions' risk and should further encourage improvements in their risk-management practices.

See the press release for full details.

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