2008 FSI Survey on the Implementation of the new capital adequacy framework in non-Basel Committee member countries

FSI Papers  | 
16 February 2009

Executive summary

Over the past several years, the Financial Stability Institute (FSI) has conducted surveys on subjects of supervisory interest and shared the results with the supervisory community. The FSI carried out a survey on Basel II implementation in 2004, which was followed by an update in 2006. In order to ascertain the current status/plans of individual jurisdictions in implementing Basel II, a brief second update of the 2004 survey was carried out in 2008.

The survey was sent to 130 jurisdictions, excluding members of the Basel Committee on Banking Supervision (BCBS), in Africa, Asia, the Caribbean, Latin America, the Middle East and Europe. Responses were received from 101 jurisdictions, representing an overall response rate of 78%.

The 2008 survey results indicate that 105 countries (92 non-BCBS jurisdictions plus 13 BCBS member countries) have implemented or are currently planning to implement Basel II. Thirty-one jurisdictions had implemented Basel II by the end of 2007 and by the end of 2008 as many as 57 jurisdictions will have implemented Basel II.

The 2008 survey responses reveal that each of the three credit risk approaches under Basel II will be implemented by more countries than indicated by the 2006 survey results.1 The Standardised Approach is the most widely used of the three credit risk methodologies - 87% of respondents adopting Basel II plan to implement the Standardised Approach. The Foundation Internal Ratings Based Approach (Foundation IRB) ranks behind the Standardised Approach, at 65%, while 61% of respondents adopting Basel II intend to offer the Advanced Internal Ratings Based Approach (Advanced IRB).

Similar trends are evident for the operational risk approaches. The 2008 survey indicates that the Basic Indicator Approach is expected to be the most widely employed - by 84% of respondents adopting Basel II, followed by the Standardised Approach - at 73%. A majority
of respondents adopting Basel II - 53% - expect to make available the Advanced Measurement Approaches (AMA) to operational risk.

The 2008 survey indicates that a large number of jurisdictions will be offering the advanced approaches for credit risk and operational risk under Pillar 1. As many as 56 jurisdictions will be offering Advanced IRB for credit risk and 49 jurisdictions will be offering AMA for operational risk by the year 2015.

The 2008 survey results indicate that 77 jurisdictions will be implementing Pillars 2 and 3 by 2015 as against 71 and 66 jurisdictions, respectively, in the 2006 survey. In the short run (up to 2009), however, a significant number of countries appear to have deferred their implementation plans for Pillars 2 and 3. A possible reason for this could be that more preparations were required for implementing Pillars 2 and 3 than originally thought at the time of the 2006 survey.

This paper presents the responses to the survey from global and regional perspectives while observing the confidentiality commitment made in respect to individual country responses.
The paper is organised as follows: Section 2 discusses the global results of the survey. Sections 3-8 describe specific plans related to the implementation of each of the Basel II components across each region.

1 Some countries that responded to the 2006 survey did not respond to the 2008 survey and vice versa.