In this document, it is proposed that the risk weight for corporate exposures, project finance, and equities be heightened. Not a few market participants have sent comment letters to the BCBS, pointing out that a significant increase in risk weight leads to a decrease in banks’ capital ratios, and the potential impact on financing for development can be huge.
While I understand that the revisions proposed by the BCBS were made to reflect the experience of the last global financial crisis, a thorough cost-benefit analysis including an examination of the impact on financing for development is necessary.