20211109_LargeModelST
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Initial impact of Basel III finalization<br />
The effect of Basel III finalisation on the euro area<br />
CET1 ratio<br />
The effect of Basel III finalisation on the total euro area REA<br />
Source: Budnik et al (2021) The growth-at-risk perspective on the system-wide impact of Basel III finalization in the euro area<br />
• An increase in REA translates into the initial reduction in the euro area CET1 ratio of around 2.5 pp (and<br />
about 0.3 pp less with a gradual implementation of the output floor)<br />
• The revision of methodologies for credit, market risk and the output floor each contributes about 7pp to the<br />
increase in REA, while the revision of operational risk adds additional 4pp<br />
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