Which item is not considered a Basel III principle?

Which item is not considered a Basel III principle?

• A. Higher capital requirements
• B. Liquidity standards
• C. Increased leverage
• D. Risk management improvements

Answer: (C)

Basel III centers on strengthening banks by requiring more capital, ensuring sufficient liquidity to weather stress, and improving risk management and governance, with a built‑in mechanism to cap how much leverage banks can take on. Increasing leverage runs contrary to these goals because Basel III uses the leverage ratio to limit the total amount of debt a bank can support relative to its equity. So, this option describes a direction that Basel III does not promote. The other items—raising capital, establishing liquidity standards, and improving risk management—are all core elements of Basel III.

Basel III centers on strengthening banks by requiring more capital, ensuring sufficient liquidity to weather stress, and improving risk management and governance, with a built‑in mechanism to cap how much leverage banks can take on. Increasing leverage runs contrary to these goals because Basel III uses the leverage ratio to limit the total amount of debt a bank can support relative to its equity. So, this option describes a direction that Basel III does not promote. The other items—raising capital, establishing liquidity standards, and improving risk management—are all core elements of Basel III.