The European Commission has published Frequently Asked Questions in relation to CRD IV – CRR. Basel Committee publishes consultative document on recognising the cost of credit protection purchased The Basel Committee on banking supervision has published a proposal that would strengthen capital requirements when banks engage in certain high cost credit protection transactions. The Committee has previously expressed concerns about potential regulatory capital arbitrage related to certain credit protection transactions. At that time it noted that that it would continue to monitor developments with respect to such transactions and would consider imposing a globally harmonised minimum capital pillar 1 requirement if necessary. After further consideration, the Committee decided to move forward with a more comprehensive pillar 1 proposal. While the Committee recognises that the purchase of credit protection can be an effective risk management too, the proposed changes are intended to ensure that the cost and not just the benefits, of purchase credit protection are appropriately recognised in regulatory capital. It does this by requiring that banks, under certain circumstances calculate the present value of premia paid for credit protection, which should be construed as an exposure amount of the protection purchasing bank and be assigned a 1.1, 250% risk weight. Feedback on the proposals is invited by Friday 21 June 2013.