Objectives of the session
The last Basel III bank international standard is intended to enhance the robustness and risk sensitivity of the standardised approaches for credit risk, market risk and operational risk, and facilitate the comparability of banks’ capital ratios. In this perspective it will constrain the use of internal models to limit the extent to which banks can lower their capital requirements.
Although the Basel III reforms benefited from an extensive consultation process, some express that domestic and regional policy makers have late been involved in the decision-making process, leading to a lack of buy in.
In this context, the EU Commission went beyond the flexibility featured by the Basel III standard by including several adaptations to the credit risk framework. It also introduced various transitory adjustments and proposed a two-year delay compared with the globally agreed timeline.
Other jurisdictions are also pushing back deadline for the Basel III update.
In this complex context, the session is intended to clarify the extent, riskiness and benefits of the adaptations and phase-in approaches being discussed in the EU, compare the EU approach with those adopted in other regions, and finally assess whether the concept of international accord is challenged.
Points of discussion
- What are the main adaptations and phase-in approaches being discussed in the EU, intended to enable the implementation the latest Basel III international banking standards in the EU? How are other regions globally (e.g., US, Asia, U.K., …) implementing the final Basel III accord?
- Is the concept of international accord challenged in this context? How to improve the situation?