Basel Credit Risk Weights : 200% means?

Aash · March 26th, 2013, 10:10 am

What is the intention of a 200% risk weight? Is it anticipating increased exposure to that credit rating in lead up to default (trying to borrow out of debt)? Can't find much derivation.explanation of this anywhere. Any response very appreciated.

farmer · March 26th, 2013, 12:32 pm

If someone wants to know what k=m+(2*n) is, usually he thinks n is more important or useful than m for making a meaningful k.

Aash · March 26th, 2013, 12:53 pm

Sorry, I see that I've been a moron. Forgot about the capital ratio. Couldn't understand why you'd keep capital to 200% of the exposure. Thank you for not treating my question with the much harsher response it deserved.