The evaluation of credit risk of off-balance-sheet (OBS) assets under Basel III requires that the notional amount of OBS items be converted to credit equivalent amounts of on-balance-sheet items.

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This statement is true. The conversion of notional amounts to credit equivalent amounts is necessary to calculate the potential credit risk of off-balance-sheet items and to incorporate them into overall risk assessments under Basel III.

The Evaluation of Credit Risk of Off-Balance-Sheet (OBS) Assets Under