Reflecting growing fears about interest-rate risk (IRR), the Basel Committee is proposing to toughen its current standards in this critical arena. It could not, however, agree on a likely approach. Instead, it is seeking comment on two options: a more prescriptive and clear set of supervisory standards, or a new Pillar 1 capital charge. Although each option is said to be mutually exclusive, Basel also says that the supervisory risk methodology would underpin a capital charge should it decide to require one instead of the full-blown supervisory framework.
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