Central banks step up pressure to bring in capital rules on time

By Huw Jones

LONDON (Reuters) – Global banking regulators and central banks said on Wednesday that the final elements of new bank capital rules designed to avoid the taxpayer bailouts seen during the global financial crisis should be implemented as soon as possible.

The European Union, a member of the rule-setting Basel committee, has proposed implementing the final elements from 2025, two years later than a globally agreed deadline of January 2023, citing pressures from COVID-19 on the sector.

The EU has also diverged in some cases from the final elements to meet “specificities” of Europe’s banking sector.

But the Basel Committee’s oversight body said in a statement that all aspects of the so-called Basel III framework should be implemented in a “full, timely and consistent manner” to avoid unfair competition among global banks.

“Members unanimously reaffirmed their expectation of implementing these standards as soon as possible,” the Group of Central Bank Governors and Heads of Supervision (GHOS) said.

Other Basel members, the United States and Britain have yet to say when they will introduce the rules or set out proposals.

Regulators have repeatedly said that major banks have capital buffers well above minimum requirements, and they proved to be resilient during extreme market turmoil and sharp recessions seen in 2020 when economies went into lockdown.

GHOS also agreed to reappoint Pablo Hernández de Cos, Governor of the Bank of Spain, as chair of the Basel Committee for a second and final term.