Assessing consistency of implementation of Basel III standards
The assessment module complements the monitoring module on the adoption of Basel III regulatory standards. Assessments review the extent to which domestic Basel III regulations in each member jurisdiction are aligned with the minimum regulatory standards agreed on by the Committee. The assessments examine the consistency and completeness of the adopted standards including the prudential significance of any deviations in the regulatory framework. To ensure that the internationally active segment of the domestic banking system is in line with the letter and spirit of the relevant Basel standards, the assessments highlight the current and potential impact on the overall regulatory environment. This provides transparency to jurisdiction as well as cross-jurisdiction level differences and allows member jurisdictions to initiate corrective measures, as appropriate, to strengthen their regulatory regimes and improve its functioning.
The RCAP assessments of capital regulations cover the full scope of Basel standards, ie Basel II, 2.5 and III.
Presently, the assessment methodology is based on the following broad elements:
- Focus is placed on reviewing the completeness (ie all required Basel III provisions have been adopted within the context of each member jurisdiction)
- A detailed examination is made of the consistency (ie differences in substance) of domestic regulations (ie binding documents that effectively implement the intent of relevant Basel III standard).
- Significance of an identified a gap or divergence from the Basel standard is based on its current and potential prudential impact.
- Local specificities are not viewed as mitigants for exceeding the scope of national discretion specified within the Basel framework.
- Domestic measures that go beyond Basel's minimum requirements do not compensate for inconsistencies or deviations identified elsewhere.
- The scope is limited to regulatory issues and does not consider risks to overall financial system stability or bank practices, or systemic spill overs
- The extent to which the local rules deliver comparable and intended results these are assessed as part of specific thematic assessments.
- The supervisory effectiveness of enforcing a regulatory regime is left for other assessment programs such as the assessments of Basel Core Principles conducted under the World Bank-IMF Financial Sector Assessment Program (FSAP), or those carried out by the Committee as part of its other "peer reviews" on supervision issues, or the broader reviews conducted by the FSB.
The following jurisdiction level assessments have been completed:
- June 2014: Canada
- March 2014: Australia
- December 2013: Brazil
- September 2013: China
- June 2013: Switzerland
- March 2013: Singapore
- October 2012: European Union
- October 2012: Japan
- October 2012: United States