Basel Committee completes reviews of all its members' risk-based capital frameworks
9 December 2016
With today's publication of reports that assess the implementation of Basel standards in Indonesia, Japan and Singapore, the Basel Committee on Banking Supervision has completed its review of the implementation of the risk-based capital framework by all of its members.
Stefan Ingves, Chairman of the Basel Committee and Governor of Sveriges Riksbank, said: "This is an important milestone in the Committee's efforts to ensure full, timely and consistent implementation of Basel standards, which is critical to improving the resilience of the global banking system."
The Committee has also carried out its first follow-up assessment on one member's risk-based capital framework. Assessments of the implementation of the Basel framework's Liquidity Coverage Ratio (LCR) will be completed by December 2017.
These reports form part of a series of publications on the implementation of Basel standards in the Committee's member jurisdictions. The assessments were conducted under the Committee's Regulatory Consistency Assessment Programme (RCAP), established in 2012 to examine the consistency and completeness of member jurisdictions' prudential standards.
During these assessments, more than 1,000 deviations and their materiality were identified. The large majority of the deviations were rectified during these assessments. The reports published today evaluate regulations adopting the Basel risk-based capital framework and the LCR.
The Indonesian LCR regulations are assessed as "compliant", the highest of the four possible grades.
The Indonesian capital framework is assessed as "largely compliant", which is one notch below the highest grade. The Indonesian authorities amended their regulations during 2016 to address differences identified between the Indonesian rules and the Basel framework. This reflects the commitment of the Indonesian authorities to adopt global prudential standards, both now and as forthcoming standards come into effect.
The Japanese LCR regulations are found to be "compliant".
The Committee has also published its first follow-up assessment of the Japanese risk-based capital framework, which was initially assessed in 2012. Since then, the Japanese authorities have addressed some of the findings from the first assessment, by introducing regulations on capital buffers and loss absorbency for regulatory capital instruments. Overall, the Japanese risk-based capital framework is still assessed as "compliant".
The Singapore LCR regulations are assessed as "compliant".
Notes to editors
The RCAP is a central element of the Basel Committee's continuing efforts to promote timely adoption of its standards and to monitor its members' full and consistent compliance with the Basel framework. The RCAP helps member jurisdictions identify deviations from the Basel framework, weigh the materiality of any deviations and undertake necessary reforms. Based on these findings, many jurisdictions have already amended their regulations to align them more closely with the Basel framework, thereby helping to promote global financial stability and a level playing field for internationally active banks. The RCAP does not evaluate the adequacy of regulatory capital, or the banking system's liquidity or resilience, or the supervisory effectiveness of the relevant authorities.