JAKARTA (TheInsiderStories) – Indonesian Financial Services Authority (FSA) will revise the minimum capital requirement for market risk, said one senior official last week. The policy taken after the meeting of the Basel Committee on Banking Supervision in Basel, Swiss.
FSA’ chairman Wimboh Santoso stated, the first agreement is a revision of the approach to calculating minimum capital requirements for market risk to mitigate imperfections in the previous approach. These improvements include establishing a clearer boundary between trading book and banking book also more risk-sensitive calculation approach.
This change complements a number of guidelines in the previous Basel III document that was published in December 2017, specifically related to Pillar 1 in response to the occurrence of the global financial crisis.
The revised market risk calculation framework has three approaches, namely the Internal Model Approach, Standardized Approach, and the Simplified Standardized Approach.
“However, for the capital adequacy calculation of market risk, banks in Indonesia are only required to use standardized approach and the simplified standardized approach which are more careful and relevant,” he said in a written statement.
Wimboh added that Indonesia is always committed to guard the implementation of Basel III in Indonesia, while taking into account the characteristics and interests of the national banking system (best fit for Indonesia).
In 2016 Indonesia has been subject to regulatory consistency assessment program (RCAP), by obtaining compliant ratings (C) for RCAP Liquidity Coverage Ratio and large compliant for RCAP Capital.
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