The Basel Committee on Banking Supervision has evaluated the impact of Basel II and Basel III on trade finance in the context of low income countries. As a result, it adopted two technical changes to the Basel regulatory capital adequacy framework related to the treatment of trade finance that will help promote trade with low-income countries. The changes:

  • waive the one-year maturity floor for certain trade finance instruments under the advanced internal ratings-based approach (AIRB) for credit risk; and
  • waive the so-called sovereign floor for certain trade-finance-related claims on banks using the standardised approach for credit risk.

(Source: Basel Makes Trade Finance Changes)