Under Basel II, the internal ratings based (IRB) approach to measuring credit risk using the advanced method will be implemented at:

Question

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The advanced internal ratings-based (IRB) approach under Basel II allows banks to use their own internal models to estimate the risk components required for determining the capital requirement for credit risk. This approach is typically implemented by the largest banks, which have the resources and sophisticated risk management systems necessary to develop and maintain the complex models required by the advanced IRB approach.

Under Basel II, the Internal Ratings Based (IRB) Approach to Measuring