While various national regulators have backed away from implementing the final Basel III capital reforms, global policymakers are continuing to push for the full adoption of those final measures.
The body that oversees the group of global banking regulators, the Basel Committee on Banking Supervision, is reiterating its expectation that countries will implement the Basel III capital regime in full, as soon as possible.
Following a meeting on May 12, the regulators’ oversight body, known as the Group of Central Bank Governors and Heads of Supervision (GHOS), which is chaired by Bank of Canada governor Tiff Macklem, stressed the importance of fully implementing the capital reforms crafted in the wake of the global financial crisis.
“The series of shocks to financial markets over the past few years have highlighted the importance of having a prudent global regulatory framework in place,” the group said.
As it stands, the standards have been adopted by about 70% of countries, the group noted.
Over the past year, however, regulators in various markets, including the U.S., Europe and Canada, have backed away from adopting their remaining reforms.
For instance, in February, the Office of the Superintendent of Financial Institutions (OSFI) said that it was putting its remaining planned changes to the capital rules — namely, changes to the “output floor,” which would increase capital requirements on the big Canadian banks — on pause indefinitely, citing uncertainty about when other jurisdictions will fully implement their final reforms.
Amid these competitive concerns, OSFI also said that it would give banks at least two years’ notice before reviving its final reforms.
Separately, the GHOS also discussed the Basel Committee’s proposed disclosure framework on climate-related financial risks.
The Basel Committee consulted on disclosure proposals in this area last year, including which aspects of the proposed disclosures would be mandatory — now, the GHOS has said that the proposed regime will be voluntary.
In the meantime, the GHOS also called on the Basel Committee to prioritize work assessing the financial implications of extreme weather events.