These Basel 2.5 and Basel III reforms either have been, or soon will be, implemented in the United States and most other countries that are home to internationally active banking firms. Also, the Basel Committee has just recently adopted the Liquidity Coverage Ratio (LCR), a first step in addressing liquidity problems. In the United States, some important additional steps have been taken.
Beginning at the peak of the crisis, the Federal Reserve has conducted stress tests of large banking organizations, making capital requirements more forward-looking by estimating the effect of an adverse economic scenario on firm capital levels in a manner less dependent on firms’ internal risk-measurement infrastructure.