The Committee believes that a successful implementation of the revised Framework will provide banks and supervisors with critical experience necessary to address such challenges. The Committee understands that the IRB approach represents a point on the continuum between purely regulatory measures of credit risk and an approach that builds more fully on internal credit risk models. In principle, further movements along that continuum are foreseeable, subject to an ability to address adequately concerns about reliability, comparability, validation, and competitive equity. | Basel Committee on Banking Supervision International Convergence of Capital Measurement and Capital Standards A Revised Framework June 2004 Requests for copies of publications, or for additions/changes to the mailing list, should be sent to: Bank for International Settlements Press & Communications CH-4002 Basel, Switzerland E-mail: publications@ Fax: +41 61 280 9100 and +41 61 280 8100 © Bank for International Settlements 2004. All rights reserved. Brief excerpts may be reproduced or translated provided the source is stated. ISBN print: 92-9131-669-5 ISBN web: 92-9197-669-5 Table of Contents Abbreviations i Introduction 1 Part 1: Scope of Application . 7 I. Introduction 7 II. Banking, securities and other financial subsidiaries . 7 III. Significant minority investments in banking, securities and other financial entities 8 IV. Insurance entities 8 V. Significant investments in commercial entities . 10 VI. Deduction of investments pursuant to this part . 10 Part 2: The First Pillar ─ Minimum Capital Requirements . 12 I. Calculation of minimum capital requirements . 12 A. Regulatory capital 12 B.
