Definition of Basel III in finance

Basel III is a set of measures aimed at reforming the global banking sector in the wake of the 2008 financial crisis to make the financial sector more stable. The main focus of Basel III is to increase the stability of banks by limiting their leverage and setting minimum capital requirement levels.

Some of the main proposals of Basel III are:

• Increase minimum capital requirements for risk-weighted assets
• Cap on leverage ratios
• Countercyclical buffer for credit