Question 12 from UPSC CSE 2015 - Economy

Question

'Basel III Accord' or simply 'Basel III' often seen in the news, seeks to

IASCODEX · Accepted Answer

Correct Option: B. improve banking sector's ability to withstand economic stress and improve risk management

Strategy: Spot the keyword 'Basel III Accord' – a direct pointer to banking regulation, not biodiversity, climate change, or technology transfer. Only option B refers to banks and their ability to handle economic stress, which matches exactly what Basel III targets. All other options are conceptually unrelated, enabling an instant, confident selection.

Key Info: Basel III is a comprehensive global regulatory framework developed by the Basel Committee on Banking Supervision. Its purpose is to strengthen regulation, supervision, and risk management within the banking sector. It was introduced in response to the 2007–09 global financial crisis.

Key features of the framework include:
- Setting higher and more stringent requirements for bank capital adequacy.
- Introducing new standards for liquidity, such as the Liquidity Coverage Ratio and the Net Stable Funding Ratio.
- Improving banks' capability to absorb economic and financial shocks.

Basel III is not related to biodiversity, which is addressed by the Convention on Biological Diversity; greenhouse gas emissions, covered by agreements like the Kyoto Protocol or Paris Agreement; or technology transfer for chlorofluorocarbons, which falls under the Montreal Protocol.

Implementation timelines for Basel III have been extended multiple times. It is being rolled out in phases by central banks globally, including the Reserve Bank of India.

IASCODEX · Answer

Option A: develop national strategies for the conservation and sustainable use of biological diversity

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Option C: reduce the greenhouse gas emissions but places a heavier burden on developed countries

IASCODEX · Answer

Option D: transfer technology from developed countries to poor countries to enable them to replace the use of chlorofluorocarbons in refrigeration with harmless chemicals