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Risk-based approach "remains the foundation" of bank capital, says Basel Committee's Byres
Risk-based capital creates right incentives for banks, according to head of Basel Committee secretariat - but critics claim supervisors are making models less risk-sensitive
![Wayne Byres of the Basel Committee on Banking Supervision Wayne Byres of the Basel Committee on Banking Supervision](/sites/default/files/styles/landscape_750_463/public/import/IMG/359/199359/wayne-byres-basel-committee-2011-580x358.jpg.webp?itok=4tVddnj2)
A risk-based approach to prudential regulation is still the best way to encourage self-discipline among banks - although it needs to be accompanied by simpler, limit-based rules, according to Wayne Byres, secretary-general of the Basel Committee on Banking Supervision.
The use of internal models in calculating capital requirements has been a controversial topic since the unprecedented losses announced by banks during the first phase of the crisis, and regulators have since clamped down on models
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