BCBS Report Examines Progress on Adoption of Basel III Framework
BCBS published the eighteenth progress report on implementation of the Basel III regulatory framework in member jurisdictions. The report sets out the adoption status of the "to-date" agreed Basel III standards for each member jurisdiction as of the end of May 2020. This includes the Basel III post-crisis reforms published by BCBS in December 2017 and the finalized minimum capital requirements for market risk published in January 2019. Since the previous report in October 2019, member jurisdictions have made further progress in implementing standards whose deadlines have passed, despite financial stability priorities related to the COVID-19 pandemic. Progress has also been made in implementing rules that are yet to come into effect.
The progress report reveals that, as of the end of May 2020, all member jurisdictions have risk-based capital rules, liquidity coverage ratio regulations, and capital conservation buffers in force. Twenty-six member jurisdictions have final rules in force for the countercyclical capital buffer and the leverage ratio based on the existing (2014) exposure definition. Fourteen member jurisdictions have issued draft or final rules for the leverage ratio based on the revised (2017) exposure definition. Twenty-five member jurisdictions have final rules in force for the domestic systemically important bank, or D-SIB, requirements. With regard to the global systemically important bank (G-SIB) requirements, all members that are home jurisdictions to G-SIBs have final rules in force. The report also reveals that:
- Twenty-one member jurisdictions have issued final rules for the revised securitization framework.
- Nineteen member jurisdictions have final rules in place for capital requirements for equity investments in funds.
- All of the twenty-seven member jurisdictions have issued draft or final rules for the net stable funding ratio.
- Twenty-one member jurisdictions have issued final rules for the capital requirements for bank exposures to central counterparties and standard on interest rate risk in the banking book.
- Twenty-three member jurisdictions have issued final rules for the standardized approach for measuring counterparty credit risk exposures.
- Twenty-two and twenty-six member jurisdictions have issued the draft or final rules for the requirements for total loss-absorbing capacity holdings and for the large exposure framework, respectively.
- One member jurisdiction has final rules in place for the revised standardized approach for credit risk
- Two member jurisdictions have final rules in places for the revised internal ratings-based approach for credit risk and the revised operational risk framework.
- Nine member jurisdictions have issued final rules for the revised minimum requirements for market risk.
While BCBS welcomes the overall progress made on the implementation of standards by member jurisdictions, it reaffirms its expectation of full, timely, and consistent implementation of the Basel III post-crisis reforms and will continue to closely monitor the implementation of these reforms. Additionally, by mid-2022, BCBS plans to complete the review of implementation of the net stable funding ratio and the large exposures framework for all member jurisdictions.
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Keywords: International, Banking, Basel, Progress Report, IRRBB, Large Exposures, Credit Risk, Market Risk, Operational Risk, Regulatory Capital, BCBS
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