https://pixabay.com

Basel Committee reports on Basel III implementation progress

13 May 2019

The Basel Committee on Banking Supervision issued the Sixteenth progress report on adoption of the Basel regulatory framework. As noted by the Group of Central Bank Governors and Heads of Supervision (GHOS), the Committee’s oversight body, its members expect full, timely and consistent implementation of the finalised Basel III reforms by member jurisdictions. The progess report sets out the adoption status of Basel III standards for each Committee member jurisdiction as of end-March 2019. It includes the Basel III post-crisis reforms published by the Committee in December 2017 and the finalised market risk framework published in January 2019. These reforms will take effect from 1 January 2022.

Since the previous report, published in October 2018, member jurisdictions have made further progress in implementing standards for which the deadlines have already passed. These include, notably, the revised securitisation framework and the leverage ratio based on the existing (2014) exposure definition. However, the report also shows that progress has been limited in the implementation of other standards, which in a number of jurisdictions have yet to be finalised and put into effect. These include the Net Stable Funding Ratio (NSFR), for which final rules are in force in only 11 member jurisdictions, although this standard took effect on 1 January 2018.

The Committee will continue to closely monitor the implementation of Basel standards including the finalised Basel III reforms.

Implementation of the Basel standards

Full, timely and consistent adoption and implementation of Basel standards is critical to:

  • improve the resilience of the global banking system
  • promote confidence in prudential ratios
  • encourage a predictable and transparent regulatory environment for internationally active banks

The Basel Committee and its governing body, the Group of Central Bank Governors and Heads of Supervision, have therefore set as a high priority the full and effective implementation of Basel standards within the globally agreed time frame. The Committee closely monitors and assesses three dimensions – timeliness, consistency and outcomes – on a regular basis.

RCAP: Regulatory Consistency Assessment Programme

The Basel Committee established a comprehensive Regulatory Consistency Assessment Programme (RCAP) in 2012 to monitor and assess the adoption and implementation of its standards, while encouraging a predictable and transparent regulatory environment for internationally active banks.

The RCAP consists of two distinct but complementary workstreams:

1. Monitoring

The transposition of Basel III regulatory standards into domestic regulations is monitored on a semiannual basis based on information provided by each member jurisdiction.

  • Monitoring reports (timeliness): a high-level view of progress made by Basel Committee members in adopting Basel III standards

2. Assessment

The Committee evaluates the consistency and completeness of the adopted standards, including the significance of any deviations from the Basel III regulatory framework. These consistency assessments are carried out on a jurisdictional and thematic basis:

  • Jurisdictional assessments (consistency) review the extent to which domestic regulations are aligned with the minimum Basel requirements agreed by the Committee and help identify material gaps in such regulations.
  • Follow-up assessments summarise actions taken or planned by members to address findings identified in jurisdictional assessments.
  • Thematic assessments (outcomes) examine the implementation of the Basel requirements at the individual bank level and seek to ensure that prudential ratios are calculated consistently by banks across jurisdictions to improve comparability across outcomes.

The Basel Committee is also involved in other activities related to the implementation of its standards, including quantitative impact studies and work related to global systemically important banks (G-SIBs).

Source: https://www.bis.org/

Leave a Reply

Your email address will not be published. Required fields are marked *