Speakers
Objectives
The Basel III post-crisis framework has been finalized at the global level since 2017 but is still in the implementation process in various jurisdictions, including the US and the EU. The EU sees the framework as essential but believes adjustments are necessary to accommodate the unique risk profiles and business models of EU banks. While all regulators agree on the need to prevent underestimation of potential losses, the EU aims to maintain mainly risk-based implementation with transitional measures to minimize abrupt impacts, such as a 5-year phase-in period.
In the US, adjustments to the standardized approach aim to reflect a broader range of risks and better align with banks’ true risk exposure, especially for complex banking organizations.
Regulators emphasise the importance of maintaining high standards to bolster confidence while ensuring global competitiveness. They believe that well-capitalised banks have room to grow. Yet regional supervisors and regulators have the final say in implementing standards, defining the leeway between minimal regulatory capital and prudential levels based on regional or national stress tests.
Eventually, this influences the actual risk profile of banks in a region and sets the competition scene with possible distortions stemming from uneven adoption of global standards, particularly regarding regulatory treatment for banking books and trading activities.
The session aims at taking stock on current Basel 3 implementation trends and related financial stability and competition consequences.
Points of discussion
- What is the Basel 3 implementation state of play in different key jurisdictions, the main inconsistencies with the global standard, and their main rationale?
- What would be the main anticipated consequences in terms of local and global financial stability and the possible impacts regarding competition level playing field?
- What are the possible policy measures likely to facilitate the uniform adoption of these measure?