Implementation and evaluation of the Basel standards

Full, timely and consistent adoption and implementation of Basel standards is critical to:

  • improve the resilience of the global banking system
  • promote confidence in prudential ratios
  • encourage a predictable and transparent regulatory environment for internationally active banks

The Basel Committee and its governing body, the Group of Central Bank Governors and Heads of Supervision, have therefore set as a high priority the full and effective implementation of Basel standards within the globally agreed time frame. The Committee closely monitors and assesses these dimensions – timeliness and consistency - on a regular basis.

After implementation, the Committee's focus is on evaluation. This encompasses the assessment of the effectiveness of the implemented Basel standards in achieving the intended goals as well as the identification of any unintended consequences. Objective, agnostic and empirically based evaluation is an integral part of the Committee's policy development process.

Implementation: Regulatory Consistency Assessment Programme (RCAP)

The Basel Committee established a comprehensive Regulatory Consistency Assessment Programme (RCAP) in 2012 to monitor and assess the adoption and implementation of its standards, while encouraging a predictable and transparent regulatory environment for internationally active banks.

RCAP: role, remit and methodologyRCAP: schedule and status of assessments

The RCAP consists of two distinct but complementary workstreams:

1. Monitoring

The transposition of Basel III regulatory standards into domestic regulations is monitored periodically based on information provided by each member jurisdiction.

2. Assessment

The Committee evaluates the consistency and completeness of the adopted standards, including the significance of any deviations from the Basel III regulatory framework. These consistency assessments are carried out on a jurisdictional and thematic basis:

  • Jurisdictional assessments (regulatory implementation consistency) review the extent to which domestic regulations are aligned with the minimum Basel requirements agreed by the Committee and help identify material gaps in such regulations.
    • Follow-up assessments summarise actions taken or planned by members to address findings identified in jurisdictional assessments.
  • Thematic assessments (consistency of bank outcomes) examine the implementation of the Basel requirements at the individual bank level and seek to ensure that prudential ratios are calculated consistently by banks across jurisdictions to improve comparability across outcomes.

Evaluation of implemented Basel III standards

The Committee established its evaluation programme in mid-2020 with the goal of assessing if the already implemented Basel III reforms have achieved their overarching objective of increasing the banking sector's resilience. The evaluation work involves the review of broad range of evidence and undertaking extensive new empirical research. It also benefits from the views and input of a broad range of stakeholders. In 2021-22, the Committee published three evaluation reports ranging in scope. The Committee will continue evaluating the impact and efficacy of Basel III in the medium term according to its 2023-24 work programme.

Committee's evaluation work

The Basel Committee is also involved in other activities related to implementation and evaluation of its standards, including quantitative impact studies and work related to global systemically important banks (G-SIBs) as well as analyses of the effects of the G20 financial regulatory reforms.