The implementation of a majority of Basel III functions is expected to be finalised in 2023 – 2024 after the Group of Central Bank Governors and Heads of Supervision (GHOS) held a meeting regarding the regulatory framework.
As well as discussing key areas of work on the regulation, the GHOS held a meeting on 12 September to discuss its timeline of Basel III’s completion amid surging inflation and a decline to many economies across the globe.
The Basel III reforms helped bring stability to the global banking system after it was a response to the great financial crisis as GHOS members analysed, monitored and assessed potential risks and vulnerabilities during the current financial climate.
The standards outlined in Basel III’s 2017 implementation was to seek to strengthen the resilience of bank capital by assessing weaknesses in the regulation highlighted by the great financial crisis, improving on transparency of banks’ risk-based capital ratios.
GHOS members continue to analyse weaknesses that could pose a threat, in particular after the COVID-19 pandemic.
Public support measures were crucial when protecting banks from losses over the course of the past two years have greater importance on the banking sector to mitigate potential shocks, GHOS revealed.
Two thirds of GHOS members plan to implement all – or a majority – of the revised Basel III standards, as the remaining jurisdictions plan to be implemented by 2025, as a limited set of technical standards stand in the way of a delay.
Members favoured unanimously that expectations of implementing all aspects of Basel III framework should be implemented as soon as possible in a consistent manner. This is in order to provide a regulatory playing field for active banks to prepare for the implementation of the standards.
Crypto assets were also on the agenda during the GHOS meeting, as well as climate-related financial risks.