Global regulators propose tighter credit risk rules for banks

Global banking regulators have proposed a more comprehensive set of rules for banks to set aside capital to cover losses from their exposures to other lenders and limit fallout in a crisis. During the financial crisis some banks suffered big losses on their derivatives contracts due to weaker creditworthiness at banks on the other side of their trades. Since then capital requirements to cover such "credit valuation adjustments" (CVA) have been beefed up but the Basel Committee of banking supervisors wants to extend them to "reduce the incentive banks currently have to leave some of their risks unhedged".

Global regulators propose tighter credit risk rules for banks source: http://finance.yahoo.com/news/global-regulators-propose-tighter-credit-152906424.html