Today, the Basel Committee published a report on the regulations that implement the Basel capital framework in Australia.
According to the Basel Committee, Australia’s implementation of the Basel capital framework was found to be closely aligned with the Basel III standards: 12 out of 14 assessed components were found to be “Compliant”. The two components that were graded “Largely Compliant” were the “Definition of Capital” and the “Internal Ratings-Based Approach for credit risk,” where some differences exist vis-à-vis the Basel framework. The overall framework of Australia’s capital regulation was graded “Compliant.”
The Basel Committee’s assessment team noted that some aspects of Australia’s capital regulations, such as those related to the definition and measurement of capital, are more rigorous than required under the Basel capital framework. The Australian Prudential Regulation Authority (APRA) has also implemented some aspects of Basel III ahead of the internationally agreed timeline and has also decided not to opt for the extended transition period for Basel capital framework implementation.
Today’s report is part of the Basel Committee’s Regulatory Consistency Assessment Programme (RCAP). Through the RCAP, the Basel Committee monitors the timely adoption of regulations by its members, assesses their consistency with the Basel capital framework and analyzes the quality of intended regulatory outcomes. The RCAP also helps member jurisdictions to identify deviations from the Basel capital framework and assesses the materiality of any deviations.
The Australia report is the eighth RCAP assessment of Basel III capital standards. Earlier reports on Brazil, China, the European Union, Japan, Singapore, Switzerland and the United States are available on the Basel Committee’s website. An assessment of the implementation of the Basel III capital standards in Canada, and follow-up assessments of the final Basel III rules in the EU and the United States are under way.
Basel Committee, Assessment of Basel III regulations – Australia (Mar. 2014) available here: http://www.bis.org/bcbs/implementation/l2_au.pdf