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The baseline bank capital requirements in the United Kingdom are being set to comply with agreed international standards established in Basel III (as implemented in Europe through CRD IV). The minimum Tier 1 requirement to be met at all times is 6% of risk-weighted assets, comprised of at least 4.5% Common Equity Tier 1 and at most 1.5% Additional Tier 1 capital. Internationally-agreed buffers, on top of this minimum, can be used to absorb losses under stress.
Financial Stability Paper No. 35: Measuring the macroeconomic costs and benefits of higher UK bank capital requirements
By Martin Brooke, Oliver Bush, Robert Edwards, Jas Ellis, Bill Francis, Rashmi Harimohan, Katharine Neiss and Caspar Siegert
