1. This document sets out the Basel Committee's finalisation of the Basel III framework. It complements the initial phase of Basel III reforms previously finalised by the Committee. The Basel III framework is a central element of the Basel Committee's response to the global financial crisis. It addresses a number of shortcomings with the pre-crisis regulatory framework and provides a regulatory foundation for a resilient banking system that supports the real economy.

2. A key objective of the revisions in this document is to reduce excessive variability of risk-weighted assets RWAs). At the peak of the global financial crises, a wide range of stakeholders - including academics, analysts and market participants - lost faith in banks' reported risk-weighted capital ratios. The Committee's own empirical analyses highlighted a worrying degree of variability in the calculation of RWAs by banks.

3. A prudent and credible calculation of RWAs is an integral element of the risk-weighted capital framework. Banks' reported risk-weighted capital ratios should be sufficiently transparent and comparable to permit stakeholders to assess their risk profile. The Committee's strategic review of the regulatory framework highlighted a number of fault lines with the existing architecture, particularly the extent to which it adequately balances simplicity, comparability and risk sensitivity.