Impact of Basel III Reforms in Implementation of Basel II/III in EMDEs

07/16/2018 - 07/20/2018 at Ebene, Mauritius

The seminar will cover the details of recently finalized Basel III reforms by the Basel Committee on Banking Supervision (BCBS) especially aspects relating to the standardized approaches for Credit and Operational risks as well as Leverage Ratio framework, Credit Value Adjustment risk framework and introduction of a robust Output Floor.

In the wake of the global financial crisis, the BCBS has been reviewing the adequacy of the capital framework and completed revisions in December 2017. The aim was not only to address the weaknesses that were revealed during the crisis, but also to reflect the experience gained with the implementation of the Basel framework since 2004. The Basel III framework, being the central element of the BCBS’s response to the crisis, addresses a number of shortcomings in the pre-crisis regulatory framework and provides a foundation for a resilient banking system that will help avoid the build-up of systemic vulnerabilities. The BCBS has revised the standardized approaches for credit, market and operational risks. The BCBS’s objective has been to ensure that the combined revisions to the standardized approaches imply that the capital requirements reflect the inherent riskiness of exposures and that the standardized approaches constitute a suitable alternative and complement to internal models. It has also revised certain elements of the Internal Ratings Based Approach to credit risk, leverage ratio framework, output floor and transitional arrangements. This will have a substantial impact on the Basel II/III implementation program of many countries in sub-Saharan Africa and there is an urgent need for prudential regulators to keep abreast of these developments.