Date: 24th of October 2021
Media: California News Times
What happened?
The European Commission proposed to postpone for two years the banking rules which were supposed to enter into force by 2023. This fact gave birth to the reaction of the Secretary-General of the Basel Committee on Banking Supervision (BCBS), Carolyn Rogers, who underlined the importance of the application of these rules on time.
Whom and where it affects?
The measures taken will set new standards for how international banks measure capital to create cross-border consistency. So, the postponement of these rules would affect European Banks (“Banks in countries such as France were hit hardest by having to hold more capital to comply with the latest rules, but delays are welcome due to the risk of conflict with global regulators”); and EU delays can also frustrate European regulators. Besides, another worldwide banks could be affected in terms of fair competition. Therefore, this possible delay in applying the rules could have a global banking repercussion.
What sort of public or private institutions are involved?
There are different institutions involved in the related new:
On the one hand, The Basel III reforms are the Basel Committee on Banking Supervision’s key response to the global financial crisis (2008). This institution is the primary global standard setter for the prudential regulation of banks and provides a forum for regular cooperation on banking supervisory matters.
On the other hand, the European Commission helps to shape the EU´s overall strategy, and, in this case, is proposing to give European banks a two-year extension of the internationally agreed deadline for implementing some new banking rules.
Moreover, the European Banking Authority (EBA) is the EU agency tasked with implementing a standard set of rules to regulate and supervise banking across all EU countries; and the European Central Bank’s supervisory committee also supervise this process of banking reforms.
Finally, different International Banks around the world will be affected for the implementation of these standards and the possible postponement decision taken by the European Commission.
Why is it important for Banking and Finance?
It’s important for Banking and Finance because it could delay the process of setting new standards for how international banks measure capital to create cross-border consistency and, as a consequence, also its long-term benefits of strengthening the resilience of the financial system.
What do you think will be the consequences in the foreseeable future?
The European Banking Authority (EBA) has published a Report on the impact of implementing the final Basel III reforms in the EU. The full Basel III implementation, in 2028, would result in an average increase of 15.4% on the current Tier 1 minimum required capital of EU banks. Taking this into account, EU delays can trigger some conflicts between the different institutions involved, because it is important that good Basel III standards be fully, timely and faithfully; in order to achieve a resilient banking system that supports the real economy.
Keywords: European Commission, Basel Committee on Banking Supervision, European Banking Authority, Basel III standars, financial system.