Mr. Mario Nava:

The Senator is referring to the risk modelling issue and this is a central issue that we need to address. Since Basel II moved to the concept of risk weighted assets and not unweighted assets, the rationale for data is that if you do not move to risk weighted assets, you implicitly assign the same risk to any activity you do and, obviously, that is not correct. Obviously, there are activities that are more risky than others and, therefore, assigning the same risk to any activities you do is not correct. The way forward is to try to model the risk. Then comes the risk modelling issue. The models are internal models of the banks but the supervisors verify the different models and we have initiatives both at the European level, at the EBA, and at the global level, the Basel committee or the BIS, to try to make sure that this modelling is not too far apart. I am happy to quote here that during the CRR approval, the parliament introduced the concept of benchmarking, essentially trying to benchmark and compare the models as much as possible.

The other extreme would be to go to a standardised model where it is equal for all and, again, that is probably too much of a simplified assumption.