Title[ Part 2: The First Pillar - Minimum Capital Requirements
Section[ B. Risk-weighted assets
44. Total risk-weighted assets are determined by multiplying the capital requirements for market risk and operational risk by 12.5 (i.e. the reciprocal of the minimum capital ratio of
8%) and adding the resulting figures to the sum of risk-weighted assets for credit risk. The Committee will review the calibration of the Framework prior to its implementation. It may apply a scaling factor in order to broadly maintain the aggregate level of minimum capital requirements, while also providing incentives to adopt the more advanced risk-sensitive approaches of the Framework.12 The scaling factor is applied to the risk-weighted asset amounts for credit risk assessed under the IRB approach.
11 The definition of Tier 3 capital as set out in the Market Risk Amendment remains unchanged.
12 The current best estimate of the scaling factor using QIS 3 data adjusted for the EL-UL decisions is 1.06. The final determination of any scaling factor will be based on the parallel calculation results which will reflect all of the elements of the f
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