20-47 The use of risk-based capital measures under Basel I effectively mark-to-market the bank's on- and off-balance-sheet for the purpose of reflecting credit and market risk.

Question

Quizplus · Accepted Answer

Risk-based capital measures under Basel I require banks to assign weights to their on- and off-balance-sheet assets based on their credit and market risk. This effectively marks these assets to market, reflecting their potential risk and ensuring that banks hold adequate capital to cover potential losses.

20-47 the Use of Risk-Based Capital Measures Under Basel I