Explanation

The Basel III revisions finalized in December 2017 (often referred to as "Basel IV") introduced significant changes to the standardized approaches for credit risk. One key change was the introduction of more risk-sensitive approaches for residential mortgage exposures.

Option B is correct because:

• The revised standardized approach for credit risk introduced loan-to-value (LTV) ratio-based risk weights for residential mortgages
• This represents a move away from the previous flat risk weights to more granular, risk-sensitive capital requirements
• For G-SIBs, using standardized approaches with enhanced risk sensitivity is particularly important

Why other options are incorrect:

• Option A: The Basel III revisions actually eliminated the use of internally created models for operational risk capital (Advanced Measurement Approaches) and replaced them with the Standardized Measurement Approach
• Option C: The revisions restricted the use of Advanced Internal Ratings-Based (AIRB) approaches, particularly for exposures to banks, large corporations, and other financial institutions
• Option D: G-SIBs are actually required to maintain higher capital buffers (including countercyclical buffers) and leverage ratios, not decrease them

The Basel III revisions aimed to reduce excessive variability in risk-weighted assets and improve comparability across banks, which is why standardized approaches with enhanced risk sensitivity (like LTV-based risk weights for mortgages) became more prominent.