Back to all announcements

Bernanke says more effort needed on challenge to global consistency of Basel II

WASHINGTON, May 18 – (Global Risk Regulator) – Achieving international consistency in the implementation of the Basel II bank safety rules will be a challenge – something that all bank regulators recognise, US Federal Reserve Board chairman Ben Bernanke said today.

“We recognise that some international implementation issues will be more complex than those we currently face,” Bernanke said in remarks prepared for delivery at the Federal Reserve Bank of Chicago’s annual conference on bank structure.

“Inconsistency in international standards of implementation and enforcement, it is sometimes said, will put internationally active US banks at a competitive disadvantage and may also hurt purely domestic US banks vis-à-vis the US subsidiaries of foreign banks.”

“US regulators are working hard through the Basel Committee (the body of top banking supervisors from North America, Europe and Japan that devised Basel II) and with individual firms and national supervisors to address international implementation issues. A great deal more effort and cooperation will be needed, but I believe that, as in the past, we can craft an acceptable set of agreements and work out means of resolving future issues.”

Bernanke urged the banking industry to comment thoroughly on the Basel II notice of proposed rulemaking, or NPR, a draft of which was issued by the Fed at the end of March and which is expected to be finalised in the near future. He also urged banks to comment on the proposed changes, dubbed Basel IA, to the current Basel I capital adequacy rules that are intended to apply to the vast majority of US banks that won’t be subject to the complex, risk-focused Basel II rules.