For minimum levels, Basel II had a Tier 1 ratio of 4% and a total capital ratio of 8%. Basel III set a CET1 ratio of 4.5%, a Tier 1 ratio of 6%, and a total capital ratio of 8%, and added capital buffers1. In Japan, it has applied in stages to banks under the international standard since 20132.

For derivatives, Basel II had no framework for the changes in the market value of derivatives caused by a counterparty's declining creditworthiness (CVA). Basel III, published in 2010, introduced a capital charge for it3. The 2017 finalization settled items such as the new standardized approach for CVA risk, and in Japan the notice has applied since March 31, 20234. After the transitional measures, implementation is on March 31, 2024 or March 31, 2025, depending on the type of bank5.

Notes

  1. Financial Services Agency, "バーゼル規制の概要" (Overview of the Basel framework, our translation) (August 2026), page 3, the chart "最低所要自己資本の水準" (Minimum capital levels) (in Japanese). ↩

  2. Financial Services Agency, "バーゼル規制の概要" (August 2026), page 2 (in Japanese). ↩

  3. Financial Services Agency and Bank of Japan, "「信用評価調整（CVA）リスクの最低所要自己資本」の概要" (Overview of "Minimum capital requirements for CVA risk", our translation) (February 2018), "１．これまでの経緯" (1. Background) (page 3 of the document) (in Japanese). ↩

  4. Notice on capital adequacy, amendment (FSA Notice No. 22 of April 28, 2022), Supplementary Provisions Article 1 and Article 2, paragraphs 1 and 2 (pages 596–597) (in Japanese). ↩

  5. Financial Services Agency, "バーゼル規制の概要" (August 2026), pages 9 and 10. For the content of the 2017 finalization, see Financial Services Agency, "プレス・リリース「中央銀行総裁・銀行監督当局長官はバーゼルⅢの最終化に合意」（仮訳）" (Press release "The Group of Central Bank Governors and Heads of Supervision agreed to the finalization of Basel III", provisional Japanese translation of the BCBS press release; our translation of the title) (December 7, 2017), pages 1–2 (in Japanese). ↩