BASEL, Switzerland, October 18 (Global Risk Regulator) – As global regulators today set out a framework for monitoring the implementation of the G20 financial reforms, a progress report on the Basel III bank measures indicated foot-dragging by some countries.
The Financial Stability Board (FSB), the body of regulators charged with coordinating implementation of the reforms of the global financial system agreed by the Group of Twenty (G20) largest economies, says its framework highlights priority areas where consistent implementation is most critical for financial stability. These areas, which include Basel III, will undergo more intensive monitoring and detailed reporting, including progress on a country-by-country basis.
Meanwhile, less than half the 27 member-countries of the Basel Committee of global banking supervisors, the architect of Basel III, appear so far to have drafted rules to give effect to the tougher bank capital and liquidity standards. The package, which includes capital surcharges for the world’s biggest banks, has met considerable opposition from the banking industry which could be influencing the attitudes of national authorities.
Basel III, which strengthens the earlier capital formats known as Basel II and Basel 2.5, is scheduled to start coming into effect from 2013 with transitional arrangements extending to 2019.
Basel Committee chairman Stefan Ingves said a critical first step in the implementation is to ensure that all Basel member countries implement the framework within agreed timelines. The progress report reflects the Basel Committee’s “strong commitment for timely, full and consistent implementation of Basel III.”
For the FSB’s monitoring programme, the initial priority areas are: Basel III; the off-exchange, over-the-counter (OTC) derivatives market reforms; pay and reward practices; policy measures for global systemically important financial institutions; resolution frameworks; and shadow banking.
FSB chairman Mario Draghi said the framework is the key to the FSB’s work programme “and comes at a crucial juncture as the reform process increasingly moves from global policy development to national implementation.”
(A Coordination Framework for Monitoring the Implementation of Agreed G20/FSB Financial Reforms – FSB, October 2011 www.financialstabilityboard.org; Progress report on Basel III implementation – www.bis.org)
David Keefe (firstname.lastname@example.org)