Abstract
The current chapter describes the international bodies and the interaction amongst them that leads to the development of international banking supervision standards. It also depicts the market or regulatory failures that contributed to the creation of new supervisory standards and the significant changes that flagged each reform. In particular, it describes the evolution of banking standards from the Basel Capital Accord (aka Basel I) to Basel III.
Also, it elaborates on the final Basel III amendments on each of the risk categories (credit, market/credit valuation adjustments, and operational risk) compared to Basel III, in an attempt to assess the direction of the impact of such changes. Finally, it briefly presents the changes in the leverage ratio framework.
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Notes
- 1.
Comprising Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, the Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, the UK, the US, and the EU.
- 2.
The international institutions which have participated in G20 meetings are the United Nations, the International Monetary Fund, the World Bank, the World Trade Organization, the Financial Stability Board , the International Labour Organisation, the Organisation for Economic Co-operation and Development (OECD).
- 3.
The G7 consists of the seven major advanced economies: Canada, France, Germany, Italy, Japan, the UK, and the US. In the last years, the EU is also represented within the G7.
- 4.
In fact, the G10 consists of 11 industrial countries, that is, Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the UK, and the US.
- 5.
Henceforth, references to “BCBS” cite either BCBS or its predecessor (CBRSP).
- 6.
Argentina, Australia, Belgium, Brazil, Canada, China, the EU (as represented by the Single Supervisory Mechanism of the European Central Bank), France, Germany, Hong Kong SAR, India, Indonesia, Italy, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Switzerland, Turkey, the UK, and the US.
- 7.
Chile, Malaysia, and the United Arab Emirates.
- 8.
Bank for International Settlements, Basel Consultative Group, EBA, European Commission, and the International Monetary Fund.
- 9.
The market risk framework has been developed in close cooperation between the BCBS and International Organisation of Securities Commissions (IOSCO).
- 10.
According to the BIS, the G-SIB surcharges span from 0% (for non-G-SIBs) to 3.5% (for the most systemically important G-SIB). As of now, none of the G-SIBs has been assigned to the highest surcharge level of 3.5%. The following G-SIBs are subject surcharges (the level of which is shown in parenthesis): HSBC (2.5%), JP Morgan Chase (2.5%), Barclays (2.0%), BNP Paribas (2.0%), Citigroup (2.0%), Deutsche Bank (2.0%), Bank of America (1.5%), Credit Suisse (1.5%), Goldman Sachs (1.5%), Mitsubishi UFJ FG (1.5%), Morgan Stanley(1.5%), the Royal Bank of Scotland (1.5%), Agricultural Bank of China (1.0%), Bank of China (1.0%), Bank of New York Mellon (1.0%), BBVA (1.0%), Groupe BCPE (1.0%), Group Crédit Agricole (1.0%), Industrial and Commercial Bank of China Limited (1.0%), ING Bank (1.0%), Mizuho FG (1.0%), Nordea (1.0%), Santander (1.0%), Société Générale (1.0%), Standard Chartered (1.0%), State Street (1.0%), Sumitomo Mitsui FG (1.0%), UBS (1.0%), Unicredit Group (1.0%), and Wells Fargo (1.0%).
- 11.
A common example of “buy-to-let” arrangement is the purchase of a residential real estate with a mortgage whose repayment relies on the letting of the residential real estate.
- 12.
The BIS press release on capital treatment for bilateral counterparty credit risk (1 June 2011) https://www.bis.org/press/p110601.htm is reflected in the consolidated document of Basel III: https://www.bis.org/publ/bcbs189.pdf. Accessed 14 November 2017.
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Akkizidis, I., Kalyvas, L. (2018). The Roadmap to the Final Basel III. In: Final Basel III Modelling. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-70425-8_2
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