Basel Committee removes national discretions: The Basel Committee has agreed to remove a number of national discretions from Basel 2. The relevant discretions relate to:

  • treatment of past-due loans;
  • definition of retail exposures;
  • transitional arrangements for corporate, sovereign, bank and retail exposures;
  • rating structure standards for wholesale exposures;
  • internal and external audit; and
  • re-ageing.

The national discretion related to the internal ratings-based (IRB) approach treatment of equity exposures will also expire in 2016. The Basel Committee also clarified in its frequently asked questions its view on funding valuation adjustments. (Source: Basel Committee Removes National Discretions)