Economics • Banking & FinanceMedium
What does the term 'Basel III Capital Conservation Buffer (CCB)' require banks to maintain?
A. A mandatory reserve of high-quality liquid assets to survive a 30-day acute stress scenario
B. An additional layer of Common Equity Tier 1 capital above the minimum regulatory capital requirement to absorb losses during periods of financial stress✓ Correct Answer
C. A fixed proportion of bad loans set aside as provisions before declaring dividends
D. An emergency liquidity fund maintained with the central bank for inter-bank settlements
💡 Solution & Explanation
The Basel III Capital Conservation Buffer requires banks to maintain an additional layer of high-quality Common Equity Tier 1 capital above regulatory minimums to absorb potential losses during periods of severe financial stress. This framework was introduced globally to enhance banking sector resilience after the financial crisis.
More Economics Banking & Finance questions
- What is the primary operational objective of introducing 'Treps (Tri-Party Repo)' in the Indian money market?
- Analyze the liquidity adjustment facility framework of the Reserve Bank of India. What is the operational…
- Which institution acts as the central banking authority in India?
- What is the statutory objective of establishing the Monetary Policy Committee in India under the Reserve Bank…
- In the context of Indian banking regulations, what does the term 'Non-Performing Asset' signify for a…