Introduction
On 12 September 2010, the Group of Governors and Heads of Supervision of the Basel Committee on Banking Supervision announced that they had reached agreement on measures that would fundamentally strengthen global capital standards. A key requirement under the new rules, known as Basel III, would be that banks would have to hold top quality capital totalling 7 per cent of their risk bearing assets, a significant increase from 2 per cent.
The purpose of this blog is to provide an update on the progress of the implementation of the Basel III framework. Our teams in banking and financial services will also be providing their insight into the issues as they unfold.
G20 summit in Seoul - consistent implementation required
November 2010
At the Seoul summit the G20 Leaders reaffirmed their commitment to take action at both the national and international level to raise regulatory standards and to ensure that national authorities implement global standards in a consistent way that avoids market fragmentation, protectionism and regulatory arbitrage. In particular the G20 Leaders confirmed that they would fully implement the new Basel III framework.
The European Commissioner for the Internal Market and Services, Michel Barnier, has issued a press statement welcoming the G20 Leaders' support of the Basel III framework. However, Barnier emphasised the need for the new framework to be consistently implemented across the globe, stating that "The Commission attaches the utmost importance to an international level playing field. If these new rules are going to work properly, it is imperative that all jurisdictions implement them at the same time, and in a consistent manner, in the EU and beyond."
The Commission has confirmed that in March 2011 it will table the necessary legislative proposals to transpose Basel III into EU law. Legislation will take the form of a revision of the Capital Requirements Directive (CRD IV).
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