How to pronounce“risk weighted”in English

risk weighted assets down to one Euro in the case of European bank which technically you could uh then you'd be asked to hold 7% of one Euro uh uh you

risk weighted assets let you do that and that's what they do and that's why those graphs look like that so shake your head but that's the truth uh to me there's no

risk weighted assets.

on risk weighted assets really the negative return on risk weighted assets and then think about what's the appropriate sort of confidence interval

value of risk weighted assets by the same percentage so imagine a bank that

Capital relative to risk weighted assets you get lower numbers if you think the

return on risk weighted assets is so this graph is actually across it's across seven countries and yes there are 11 bars um because we had they had data

bosel 3 risk weighted assets um none of us have the the data that are sufficient

distribution of the negative return on risk weighted assets over a one-year period and we did this not just for the for the 99th percentile but other

that Capital the multiple is of risk weighted assets so if you don't believe

The requirement was that they have 2% equity to risk weighted asset not the total asset.

and I think of this as capital relative to risk weighted assets uh and think of the vertical axis as just a measure of the thing you're

to hold and both the liquidity requirements and the risk weighted assets are providing an encouragement to purchase what are at least from a

return on the theoretical return on basil 3 risk weighted assets look like um if you're getting the sense that you know all this requires a lot of judgment

their portfolio uh to minimize the amount of risk weighted Capital that they have uh and therefore to uh uh because the the multiple of to calculate

to make that more transparent uh to the users risk weighted assets anyone want to join in on that Rafel you were somewhat critical of the of the

requirements are larger than the stated increase in capit Capital requirements because the measure of risk against risk weighted assets is itself also being

reason the basis for this is as I noted if bosel 3 risk weats are increasing if the risk weighted assets under bosel 3 are increasing then if you just went for

Capital to each business uh which is based on uh in part uh risk weighted

judgments being made I I I agree with Wilson and uh that uh risk weighted

Raphael presented the view, the risk rates could be distorted and one of the immediate ways to satisfy capital requirements based on risk weighted assets to move to low

ball four ball five uh it would be desirable that we headed in the direction of higher Capital requirements relative to risk weighted assets I

I've simply taken in some sense a a rather arbitrary assumption that the answer is one for one on risk weighted assets so if the shock is uh not this

suggested that the minimum standard should be on a bosel one basis across jurisdictions sort of somewhere in the four to 6% of risk weighted assets um

results that you know you could reasonably conclude would be anywhere from 3 to 7% of bosel one risk weighted assets some cases bosel 2 risk weighted

problem with the problem with the Basel system is the Basel has nothing to say about the ratio of risk weighted assets to total assets so

regulatory an operating environment indeed if anything we probably tended to focus more heavily on profitability especially relative to risk weighted

capital is eroded by losses non-defaulted borrowers get downgraded and of course this should lead to an in increasing risk weighted assets which

is very important and in particular the way in which it has or it has not been addressed by supervisors I want to talk about what's happened with risk weighted