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November 23, 2018

BCBS published a report updating the G20 Leaders on progress and challenges in the implementation of Basel III regulatory reforms. This report covers progress made since July 2017, when the Basel Committee last reported to the G20. The report summarizes steps taken by the 27 Basel Committee member jurisdictions to adopt the Basel III standards. The report also assesses the progress of banks toward bolstering their capital and liquidity positions, reviews the consistency of implementation in assessed jurisdictions, and presents the implementation work plan of BCBS.

The report highlights that further progress has been made since last year in implementing the Basel III standards in a full, timely, and consistent manner. In addition, banks have continued to build capital and liquidity buffers while reducing their leverage. The Basel III standards for capital, liquidity and global systemically important banks (G-SIBs) have generally been transposed into domestic regulations within the time frame set by the Basel Committee. The key components, including the risk-based capital standards and the liquidity coverage ratio (LCR), are enforced by all member jurisdictions. Additionally, member jurisdictions continue their efforts to adopt other Basel III standards, including those on margin requirements for non-centrally cleared derivatives, the net stable funding ratio (NSFR), the leverage ratio, revised securitization framework, standardized approach for measuring counterparty credit risk exposures (SA-CCR), capital requirements for bank exposures to central counterparties (CCPs), and revised Pillar 3 disclosure requirements.

However, challenges remain, particularly regarding the timely regulatory adoption of these standards. While some member jurisdictions have implemented the standards based on the agreed timelines, others have faced delays so that, in many jurisdictions, rules have yet to be finalized or put into effect. Further, some jurisdictions have reported that their implementation of certain standards has been or will be delayed. This is notably the case for the NSFR, with only 10 member jurisdictions having final rules in force. Consistent with last year’s report, limited progress has been also observed in the implementation of capital requirements for equity investments in funds. A considerable number of Basel standards remain due to be transposed into domestic regulations over the next few years, including the requirements for total loss-absorbing capacity (TLAC) holdings and disclosure, the supervisory framework for measuring and controlling large exposures, and the final Basel III reforms, which were issued in December 2017. 

The Committee urges member jurisdictions to complete the implementation of standards whose implementation date has passed and to start the process of transposing the final Basel III reforms into their domestic (national or regional) banking regulations. To maximize the benefits of these reforms, the Basel Committee will continue to closely monitor the implementation and impact of its standards and report to the G20 on progress. This is the Basel Committee's ninth report that summarizes outcomes of the Regulatory Consistency Assessment Program (RCAP) of BCBS. 

 

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Keywords: International, Banking, Basel III, RCAP, G20, Regulatory Reforms, BCBS

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