Based on policy judgment derived from various empirical analysis, the Basel Committee has determined that the magnitude of additional loss absorbency for the highest populated bucket should be 2.5% of risk-weighted assets at all times, with an initially empty top bucket (fifth bucket) of 3.5% of risk-weighted assets. The magnitude of additional loss absorbency for the lowest bucket should be 1.0% of risk-weighted assets.
The magnitude of additional loss absorbency is to be met with common equity Tier 1 capital as defined by the Basel III framework. The G-SIBs will also be subject to tighter supervision. In addition, liquidity standards have been introduced to reduce excessive reliance on short term wholesale funding.