The U.S. agencies also included in the NPR a timetable and set of transition safeguards that are more rigorous than those set forth in the 2004 Basel II framework. For instance, the U.S. agencies are proposing three transition floors, below which minimum required capital under Basel II will not be permitted to fall, relative to the general risk-based capital rules.
The first transition period would have a floor of 95 percent, the second 85 percent, and the third 80 percent. Part of the justification for implementing more rigorous floors stemmed from the lessons we learned from the fourth quantitative impact study (QIS4) conducted in the United States in 2004.