Banks to be checked to see if Basel III being carried out in unforeseen ways, Coen says

8 February 2019 8:17pm
The Basel Committee on Banking Supervision will examine whether banks are implementing Basel III standards by exploiting rule differences or adapting their business practices in unanticipated ways, the committee’s William Coen said.

“We need to understand all the impacts, not just the quantitative impact,” Coen, Basel's secretary general, said in an industry interview posted on the Bank for International Settlements website. “For example, are banks changing their behavior? Are there opportunities for regulatory arbitrage? How are banks optimizing the rules?”

He continued: “I say that not in a negative sense. Naturally, banks are expected to meet rules as set out by the Basel framework.”

Basel, made up of central banks and financial regulators around the world, will then consider ways to address any problems discovered in these assessments, Coen said in the interview with Institute of International Finance trade group.