Basel III

On 16 December 2010, the Basel Committee on Banking Supervision published its new regulatory framework, “Basel III”. Since then, it has also issued minimum requirements to ensure loss absorbency at the point of non-viability and finalised the capital treatment for bilateral counterparty credit risk. The Bundesbank played an important role in drawing up these regulations.

At the summit in Seoul in November 2010, the G20 leaders endorsed Basel III and pledged to rigorously implement the framework. This directive is to be translated into national law by the end of 2012. Implementation in national law was completed at the end of October and published in the Federal Law Gazette (Bundesgesetzblatt). At the EU level, the EU Commission has made a proposal ["CRD IV" consisting of Capital Requirements Directive (in English) and Capital Requirements Directive (in German) and Capital Requirements Regulation (in English)] published in July 2011.

Basel III in the broader sense also includes the 2004 framework for the “International Convergence of Capital Measurement and Capital Standards” (“Basel II”) and decisions taken since then by the Basel Committee on Banking Supervision. For instance, the Basel Committee responded to the subprime crisis by approving a package of measures strengthening the rules, especially for securitisations and market risk, in 2009, with updates in 2010 and 2011. These improvements to Basel II are referred to informally as “Basel II plus” or “Basel 2.5”. At EU level, the “Capital Requirements Directive CRD III” (in German only) was adopted in 2010. The implementation into national law was completed at the end of October and published in the Federal Law Gazette (Bundesgesetzblatt). The changes to Pillar 2 were included in the amended Minimum Requirements for Risk Management (MaRisk) of 2009 (BaFin Circular 15/2009); implementation of the new remuneration rules was completed in 2010 with the adoption of the Regulation Governing Remuneration at Institutions (in German only).

In November 2011, the G20 leaders focused on the prudential treatment of global systemically important financial institutions (G-SIFIs) and committed to implementing the recommendations of the Basel Committee on Banking Supervision and the Financial Stability Board (FSB).

The Bundesbank has taken the opportunity of the adoption of Basel III to issue a manual introducing and explaining the most important provisions of Basel III. You can download this publication or order it in paper form at Publikationsbestellung@bundesbank.de, stating your name and a complete postal address.