Evaluation of the impact and efficacy of the Basel III reforms

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BCBS  | 
Implementation reports
14 December 2022
Status:  Current

The Basel Committee on Banking Supervision has published its third evaluation report along with a technical Annex, providing its first holistic evaluation of the impact and efficacy of the implemented Basel III reforms.

Following the issuance of the reforms, the Committee has prioritised evidence-based evaluations of the effectiveness of the Basel III standards. This evaluation report assesses whether the implemented reforms have met their intended objectives, in particular of increasing bank resilience and reducing systemic risk. It also examines some potential unintended effects, notably on banks' lending and capital costs.

In July 2021, the Committee published Early lessons from the Covid-19 pandemic on the Basel reforms, which provided an initial assessment of whether the Basel reforms have functioned as intended in light of the Covid-19 pandemic.  In October 2022, the Committee published Buffer usability and cyclicality in the Basel framework, which examined several follow-up questions regarding the usability of capital and liquidity buffers as well as potential sources of cyclicality in the Basel Framework. This third report sets out the Committee's first holistic evaluation of the Basel III reforms since their implementation.

The report's empirical analysis provides evidence on:

  1. the impact of the capital and liquidity reforms on bank resilience and systemic risk;
  2. potential side effects on banks' lending and capital costs; and
  3. interactions among elements of the reforms and the regulatory complexity within the Basel Framework.