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Basel Committee eases trade finance rules

25 October 2011

Basel Committee relaxes Basel II regulations for trade finance.

Read more: Basel regulations WTO ICC Basel II trade finance capital requirements liquidity AIRB credit risk ICC-ADB

The Basel Committee on Banking Supervision has relaxed the Basel II regulatory capital adequacy framework for trade finance.

The committee has agreed to waive the one-year maturity floor for certain trade finance instruments under the advanced internal ratings-based approach (AIRB) for credit risk.

It has also agreed to waive the so-called sovereign floor for certain trade finance-related claims on banks using the standardised approach for credit risk.

Although no further detail has been given it is believed that the two waivers will impact off-balance sheet trade finance instruments, such as letters of credit.

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