The Basel Committee on Banking Supervision has agreed on the details of the Basel III rules text covering global regulatory standards on capital adequacy and liquidity which would be published by the year-end.
At the end of its two-day meeting in Basel on Wednesday, in which 28 major countries, including India and representatives from the IMF and European Commission took part, it was agreed that the Committee would also publish by the year-end a summary of the results of its comprehensive quantitative impact study (QIS) conducted this year. The results of the QIS and the Committee's economic impact assessment analysis were important factors in designing and calibrating the Basel III framework.
Referring to the details of the Basel III rules text, the Committee said the liquidity coverage ratio and the net stable funding ratio would be subject to an observation period and would include a review clause to address any unintended consequences.
The Committee's oversight body of central bank governors and heads of supervision reached agreement on the Basel III regulatory framework in July and September 2010. The framework was endorsed by the G-20 leaders at Seoul last month.
Besides, the Committee reviewed issues related to globally systemic banking institutions. Such banks should have loss-absorbing capacity beyond the Basel III standards and work on this topic continues in the Committee and Financial Stability Board. It also reviewed a provisional methodology comprising both quantitative and qualitative indicators to assist the national authorities in assessing the systemic importance of financial institutions at the global level. It would forward a paper on these topics to the Financial Stability Board (FSB) by the end of this year for its review.
Loss absorbency
The Committee will also complete by mid-2011 a study of the magnitude of additional loss absorbency that global systemically important banks should have. It is also assessing the extent of going-concern loss absorbency that could be provided by different instruments and this review would be over by mid-2011. Taking account of the comments received during a recent public consultation, the Committee agreed on key elements of the proposal to ensure loss absorbency of regulatory capital at the point of non-viability and would elaborate the rules concerning transitional arrangements and grandfathering.
The Committee also discussed cross-border banking resolution. It agreed to undertake further work to evaluate the progress in national and multinational efforts to adopt improvements that enhance the authorities' capability to manage and resolve distressed banking institutions in a manner that minimises disruptions to the financial system.
This work aims to assist national authorities in their national reforms and to promote greater convergence of a bank crisis management's powers between home and host supervisors.
This is an important element in achieving effective cross-border crisis resolution, a statement from the Committee said.
Finally, the Committee has made progress in updating its rules for the capitalisation of bank exposure to central counterparties and would issue by the year-end a consultation paper on this. It would also undertake an impact study on the proposed rules with the aim of finalising the rules in 2011.
As suggested by the G-20 leaders, the Committee would also evaluate the impact of the regulatory regime on trade finance in the context of low-income countries.
+1.jpg)
0 comments
Post a Comment