It makes sense to defer the implementation of Basel III

Pfandbrief banks have welcomed today’s decision by the oversight body of the “Basel Committee on Banking Supervision” (BCBS) to defer the implementation of Basel III regulations by a year. The changes to the schedule are intended to increase the operational capacity of banks and supervisors to allow them to respond to Covid-19.

The approved measures include:

• The implementation date for the Basel III standards that were finalised in December 2017 has been deferred by one year to 1 January 2023.
• The accompanying transitional arrangements for the output floor have also been extended by one year to 1 January 2028.

“We expressly welcome the deferment of Basel III implementation,” says Jens Tolckmitt, Chief Executive of the Association of German Pfandbrief Banks (vdp). “The coronavirus crisis is creating huge challenges for society and the economy, which we will only be able to overcome collectively. We now firstly need to prioritise financing for the real economy. All other projects must be systematically reviewed with this goal in mind and aligned with it.”

The vdp is therefore calling for decision-making bodies in Brussels to follow the BCBS’ decision and resolve to defer the Basel III legislative process.