The Basel Committee has published its second report looking at risk-weighted assets (RWAs) in the banking book. The report forms part of the Committee’s Regulatory Consistency Assessment Programme (RCAP) under the Basel III framework. It examines the variability of RWAs in banks that use internal models to calculate their credit risk regulatory capital requirements. It considers risk estimates used for exposures to retail customers and SMEs and then explores the way banks evaluate the likely exposure at default across all asset classes. The report describes sound practices observed in banks’ independent model validation functions, including the governance of the validation process, the methodology and scope of banks’ validation functions and the role of the validation function across different phases of model development and implementation. (Source: Basel Committee reports on RWAs in the banking book)