Lecture 1. Basle Committee on Banking Supervision Quiz

What is the main objective of the Basle Committee's framework?

• To eliminate all banking regulations

• To promote competition among banks

• To secure international convergence of capital adequacy regulations

• To increase the number of banks globally

What is the minimum target standard ratio of capital to weighted risk assets set by the Committee?

• 5%

• 6%

• 8%

• 10%

Which of the following is considered core capital according to the framework?

• General provisions

• Revaluation reserves

• Equity capital and disclosed reserves

• Subordinated debt

What is the transitional period for banks to meet the minimum standard?

• Until the end of 1992

• Until the end of 1988

• Until the end of 1990

• Until the end of 1995

Which of the following risks is primarily focused on in the framework?

• Operational risk

• Credit risk

• Market risk

• Liquidity risk

What percentage of a bank's capital base must consist of core capital?

• At least 4%

• 25%

• 75%

• 50%

Which of the following is NOT included in supplementary capital?

• Core equity capital

• Hybrid debt capital instruments

• Undisclosed reserves

• General provisions

What is the weight assigned to loans fully secured by mortgage on residential property?

• 20%

• 0%

• 50%

• 100%

Which countries are represented in the Basle Committee?

• Only European countries

• G-10 countries and Luxembourg

• All countries in the world

• Only developed countries

What is the purpose of the risk weighting system?

• To increase profits for banks

• To eliminate the need for capital

• To assess capital adequacy based on asset risk

• To simplify banking operations