For immediate release

The Federal Reserve Board today issued an interim rule and requested public comment on amendments to reduce regulatory burden in risk-based capital guidelines that apply to banking organizations with significant trading activities. The action was issued jointly with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The interim rule is effective December 31, 1997. Comment is requested by March 2, 1998. The amendments eliminate the requirement that when an institution measures specific market risk using its internal model, the total capital charge for specific risk must equal at least 50 percent of the standard specific risk capital charge. The amendments implement a revision to the Basle Accord that permits such treatment for an institution whose internal model adequately measures specific risk. The rule will reduce regulatory burden for institutions with qualifying internal models because they will no longer be required to calculate a standard specific risk capital charge. The interagency notice is attached.

Summary only | Summary and joint interim rule (40 KB PDF)

1997 Banking and consumer regulatory policy