Ingves: Last part of Basel III regulation finalised
Date
25/09/2014
This week the 18th International Conference of Banking Supervisors (ICBS) took place in Tianjin, China. Central banks and supervisory authorities from over 100 countries met in order to discuss bank regulation and supervision. The Basel Committee's third meeting for the year was also held in conjunction with the conference.
In his role as Chairman of the Basel Committee on Banking Supervision, the Riksbank's Governor Stefan Ingves was one of two hosts for the conference which was jointly arranged by the Basel Committee and the China Banking Regulatory Commission (CBRC). First Deputy Governor Kerstin af Jochnick also participated in the meeting and the conference.
Among other matters, the Basel Committee agreed on a final regulatory framework for the Net Stable Funding Ratio (NSFR). The NSFR limits banks' liquidity risks by restricting the extent to which assets at long maturities may be funded by short term debt. Its purpose is to ensure that banks have a sound funding profile. The NSFR is the last major piece of the new regulatory framework for banks, Basel III, which forms a central part of the reform agenda taken up by the Committee after the financial crisis. The Committee also made progress in the work of developing a regulatory framework to contribute towards increasing confidence in banks' risk weights. Among other matters, proposals for capital floors and a revised standardised approach for credit risk were discussed.
In his opening address for the ICBS on Wednesday, Mr Ingves highlighted the Basel Committee's latest achievements. He specifically mentioned the completion of the last part of Basel III as an important milestone. At the same time, he pointed out that more than seven years have now passed since the start of the financial crisis and that this is the time to take stock of what has been done and to look at the challenges ahead.
According to Mr Ingves, one of the greatest challenges for the Committee in the period ahead will be improving the reliability and comparability of banks' risk-weighted assets. Otherwise there is a risk that the regulatory framework developed by the Basel Committee in recent years will not be as effective as intended.
The Basel Committee's press release on the decisions taken at the meeting and Stefan Ingves' full speech are available at the Basel Committee's website. See the links.
