Basel III

Basel III is the third Basel Accord, a framework that sets international standards for bank capital adequacy, stress testing, and liquidity requirements. Augmenting and superseding parts of the Basel II standards, it was developed in response to the deficiencies in financial regulation revealed by the financial crisis of 2007–08. It is intended to strengthen bank capital requirements by increasing minimum capital requirements, holdings of high quality liquid assets, and decreasing bank leverage.

Basel III was published by the Basel Committee on Banking Supervision in November 2010, and was scheduled to be introduced from 2013 until 2015; however, implementation was extended repeatedly to 1 January 2022 and then again until 1 January 2023, in the wake of the COVID-19 pandemic.[1][2][3][4]

The new standards that come into effect in January 2023, that is, the Fundamental Review of the Trading Book (FRTB) and the Basel III: Finalising post-crisis reforms, are sometimes referred to as Basel IV. However, the secretary general of the Basel Committee said, in a 2016 speech, that he did not believe the changes are substantial enough to warrant that title and the Basel Committee refer to only three Basel Accords.[5][6]

  1. ^ "Group of Governors and Heads of Supervision announces higher global minimum capital standards" (PDF). Basel Committee on Banking Supervision. 12 September 2010.
  2. ^ Financial Times report Oct 2012
  3. ^ "Basel III – Implementation - Financial Stability Board". www.fsb.org. 24 August 2016. Retrieved 21 March 2019.
  4. ^ "Governors and Heads of Supervision announce deferral of Basel III implementation to increase operational capacity of banks and supervisors to respond to Covid-19". 27 March 2020. {{cite journal}}: Cite journal requires |journal= (help)
  5. ^ Coen, William (5 April 2016). "The global policy reform agenda: completing the job". {{cite journal}}: Cite journal requires |journal= (help)
  6. ^ "History of the Basel Committee". 9 October 2014. {{cite journal}}: Cite journal requires |journal= (help)