UPSC Prelims 2015 · Question 65 of 98
UPSC Prelims 2015 question on Basel III
- ExamUPSC CSE
- Year2015
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicBanking
- DifficultyMedium
- TypeDirect
Basel III Accord' or simply 'Basel III', often seen in the news, seeks to
Show answer
Answer: B. improve banking sector's ability to deal with economic stress and improve risk management
Verdict
The answer is to improve the banking sector's ability to deal with economic stress and improve risk management. Basel III is a banking regulation framework.
Analysis
Basel III is a global, voluntary regulatory framework issued by the Basel Committee on Banking Supervision covering bank capital adequacy, stress testing, leverage and market liquidity risk. It followed the financial crisis of 2008 and tightened the quantity and quality of capital banks must hold. The first option describes the Convention on Biological Diversity, the third describes the climate change regime with its principle of differentiated responsibility, and the fourth describes the Multilateral Fund under the Montreal Protocol. All three belong to environmental regimes rather than to finance.
Source
Reporting on Reserve Bank norms for the bank leverage ratio under Basel III.
How to crack it
Three of the four options here are environmental and only one is financial, so the option set can be sorted by domain before any specific knowledge is applied. Basel is a Swiss city that hosts the Bank for International Settlements, which fixes the domain by itself. Attach institution names to cities where you can, since Basel means banking supervision, Bretton Woods means the Fund and the Bank, and Bali, Kyoto and Paris mean climate.