IBFed: Basel Must Not Rush to Revise Capital Standards

As the Basel Committee on Banking Supervision continues work on a new round of capital standards — an effort often described as “Basel IV” — the International Banking Federation today cautioned Basel and the Group of 20 advanced economies to keep focused on economic growth and avoid major regulatory changes that could dampen it.

“[E]conomic growth should be the first priority of the G20, and as a result, the BCBS should not rush towards concluding on the standards at any cost,” IBFed said. “While the changes to the Basel framework have the objective of enhancing bank resilience and strengthening financial stability, we note that growing economies tend to accomplish both of these aims. As such, it is important to preserve rather than inhibit the ability of banks to carry out their role in promoting growth in the economy.”

IBFed — an alliance of national banking associations of which the American Bankers Association is an active founding member — added that Basel should carefully review the results of past capital framework changes before proceeding with new standards. “There should be an acknowledgement from both the Committee and the G20 that we are at the end of the process of establishing new regulatory standards prompted by the global financial crisis, and that we are now at the point to review the performance of these standards individually and as a whole in terms of their impact on economic growth,” the group said.