In August 1996, the U.S. bank regulatory agenciesadopted the market risk amendment (MRA) to the 1988Basle Capital …

Traditionally, regulation of banks has focused on the riskentailed in bank loans. Loans are typically nontradedassets …. In recent years, another component of bank assetshas become increasingly important: assets actively tradedin the … financial markets.1 These assets form the “tradingbook” of a bank, in contrast to the “banking book,” whichincludes the …

Bank supervisors have long recognized two types of shortcomingsin the Basle Accord’s risk-based capital (RBC …)framework. First, the regulatory measures of “capital” maynot represent a bank’s true capacity to absorb unexpectedlosses. Deficiencies …

incorporates the risks of a bank’s asset, liability,and off-balance-sheet positions as well as its leverage.We also use information …